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Semiparametric Construction of Spatial Generalized Hedonic Models for Private Properties

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  • Stefan Sebastian Fahrlaender

Abstract

This paper analyzes the empirical hedonic prices for non-standard condominiums and single family houses using nonparametric estimates as well as a generalized additive model for the spatial generalization of the attractiveness of all Swiss communities. We find that the assumption of log-linearity for continuous variables does not hold but can be replaced by partwise log-linear or quadratic terms. Due to the topographical segmentation of Switzerland, driving times seem to be more adequate than geographical distances to explain the price level of a village with the price level of its neighbours. We show, that using metric multidimensional scaling, the driving times between the villages can be converted into artificial coordinates with three principal axis to serve as a basis for the prediction of the macro-locations of the Swiss villages

Suggested Citation

  • Stefan Sebastian Fahrlaender, 2005. "Semiparametric Construction of Spatial Generalized Hedonic Models for Private Properties," Diskussionsschriften dp0507, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp0507
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    References listed on IDEAS

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    1. Martin Hoesli & Philippe Favarger & Carmelo Giaccotto, 1997. "Real Estate Price Indices and Performance: The Case of Geneva," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 133(I), pages 29-48, March.
    2. Steven C. Bourassa & Eva Cantoni & Martin Hoesli, 2005. "Spatial Dependence, Housing Submarkets, and House Prices," FAME Research Paper Series rp151, International Center for Financial Asset Management and Engineering.
    3. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    4. Bradford Case & John Clapp & Robin Dubin & Mauricio Rodriguez, 2004. "Modeling Spatial and Temporal House Price Patterns: A Comparison of Four Models," The Journal of Real Estate Finance and Economics, Springer, vol. 29(2), pages 167-191, September.
    5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    6. Jonathan Murray & Nicholas Sarantis, 1999. "Price-Quality Relations and Hedonic Price Indexes for Cars in the United Kingdom," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 5-27.
    7. Stephen Malpezzi, "undated". "Hedonic Pricing Models: A Selective and Applied Review," Wisconsin-Madison CULER working papers 02-05, University of Wisconsin Center for Urban Land Economic Research.
    8. John M. Clapp, 2004. "A Semiparametric Method for Estimating Local House Price Indices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(1), pages 127-160, March.
    9. Kinoshita, Tomio, 1987. "Working Hours and Hedonic Wages in the Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1262-1277, December.
    10. Jon P. Nelson, 2004. "Meta-Analysis of Airport Noise and Hedonic Property Values," Journal of Transport Economics and Policy, University of Bath, vol. 38(1), pages 1-27, January.
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    Cited by:

    1. Stefan Sebastian Fahrländer, 2008. "Indirect Construction of Hedonic Price Indexes for Private Properties," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(IV), pages 607-630, December.
    2. Stefan S. Fahrlaender, 2006. "Indirect Construction of Hedonic Price Indexes: Empirical Evidence for Private Properties in Switzerland," Diskussionsschriften dp0601, Universitaet Bern, Departement Volkswirtschaft.
    3. Stefan Sebastian Fahrländer & Michael Gerfin & Manuel Lehner, 2015. "The influence of noise on net revenue and values of investment properties: Evidence from Switzerland," Diskussionsschriften dp1502, Universitaet Bern, Departement Volkswirtschaft.
    4. Kristian Blickle, 2017. "Local Banks, Credit Supply, and House Prices," Working Papers on Finance 1811, University of St. Gallen, School of Finance.
    5. Dragana Djurdjevic & Christine Eugster & Ronny Haase, 2008. "Estimation of Hedonic Models Using a Multilevel Approach: An Application for the Swiss Rental Market," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(IV), pages 679-701, December.
    6. Steven C. Bourassa & Martin Hoesli & Donato Scognamiglio & Philippe Sormani, 2008. "Constant-Quality House Price Indexes for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 144(IV), pages 561-575, December.

    More about this item

    Keywords

    Hedonic prices; private property; Switzerland; robust regression; splines; multidimensional scaling;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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