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Evaluating Housing Price Predictability of Alternative Hedonic Model Formulations

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  • Liv Osland

    ()

  • Inge Thorsen

    ()

Abstract

We first use alternative hedonic model formulations to compare predicted and observed prices of property transactions in alternative locations. The estimation of model parameters is based on data from Western Norway, and the model formulations differ with respect to the representation of spatial structure. We discuss how measures like the distance to the cbd and a gravity based accessibility measure of labour market accessibility, contribute to predict spatial variations in housing prices. We also discuss how appropriate alternative models are to predict possible consequences on housing prices of changes in the spatial distribution of employment, and in the road transportation network. Finally, we recommend that a relative measure of labour market accessibility is introduced, to capture effects of spatial competition in the housing market.

Suggested Citation

  • Liv Osland & Inge Thorsen, 2006. "Evaluating Housing Price Predictability of Alternative Hedonic Model Formulations," ERSA conference papers ersa06p492, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa06p492
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    1. Osland, Liv & Thorsen, Inge & Gitlesen, Jens Petter, 2005. "Housing price gradients in a geography with one dominating center," Working Papers in Economics 06/05, University of Bergen, Department of Economics.
    2. E Heikkila & P Gordon & J I Kim & R B Peiser & H W Richardson & D Dale-Johnson, 1989. "What happened to the CBD-distance gradient?: land values in a policentric city," Environment and Planning A, Pion Ltd, London, vol. 21(2), pages 221-232, February.
    3. McMillen, Daniel P., 2003. "The return of centralization to Chicago: using repeat sales to identify changes in house price distance gradients," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 287-304, May.
    4. Osland, Liv & Thorsen, Inge, 2005. "Effects on housing prices of urban attraction and labor market accessibility," Working Papers in Economics 17/05, University of Bergen, Department of Economics.
    5. Waddell, Paul & Berry, Brian J L & Hoch, Irving, 1993. "Residential Property Values in a Multinodal Urban Area: New Evidence on the Implicit Price of Location," The Journal of Real Estate Finance and Economics, Springer, vol. 7(2), pages 117-141, September.
    6. E Heikkila & P Gordon & J I Kim & R B Peiser & H W Richardson & D Dale-Johnson, 1989. "What Happened to the CBD-Distance Gradient?: Land Values in a Policentric City," Environment and Planning A, , vol. 21(2), pages 221-232, February.
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