Links between Residential Choice Criteria and Property Values. Some Evidence Using Correspondance Analysis and Hedonic Modelling

With the hedonic modelling approach, real estate values are traditionally explained using property specific descriptors and locational attributes. Until yet, few attention has been given to the impact of the buyerís or the sellerís profile or motivations. However, it appears that the residential choice criteria may vary depending on the buyerís characteristics ñ e.g, socio-economic status, life-cycle factors. Also, these differences in choice criteria may indicate the presence of submarkets, which may lead to spatial ñ or social ñ heterogeneity in implicit prices. Following a large phone survey held in Quebec City, Canada, the choice criteria of 750 single-family property buyers are first analyzed using Correspondence Analysis. The resulting eight residential choice factors are then introduced within a hedonic model, indicating significant links between the dimensions of choice, the property values, and the implicit prices. By explaining the heterogeneity of implicit prices using the residential choice factors, the understanding of the complex mechanism of value determination is enhanced. Furthermore, by doing so, the local spatial autocorrelation of the residuals becomes close to null, showing that the introduction of the buyerís choice criteria contributes to explaining the spatial complexity of property markets.