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Is my rental price overestimated? A small area index for Germany

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  • Eilers, Lea

Abstract

Real estate prices are central to a range of themes that are, e.g., relevant for monetary policy, community development, environmental valuation, and economic planning more generally. This paper developes a real estate index based on apartment offer prices on the post code level for Germany, taking into accout apartment heterogeneity and small sample sizes within regional areas as well as spatial and temporal dependencies. In a first step, a hedonic price function is estimated. In a second step, the residuals calculated from the hedonic function are used as direct estimates in a small area estimation (SAE). This technique is designed to yield estimates with a smaller variance in the context of small samples. The results show similarities between the estimates obtained from the residuals and SAE estimates. But the SAE models show non-negligible gains in accuracy for the coefficient of variance, i.e. the estimates are stabilized.

Suggested Citation

  • Eilers, Lea, 2017. "Is my rental price overestimated? A small area index for Germany," Ruhr Economic Papers 734, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:734
    DOI: 10.4419/86788854
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    References listed on IDEAS

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    1. Phillip an de Meulen & Martin Micheli & Sandra Schaffner, 2014. "Documentation of German Real Estate Market Data - Sample of Real Estate Advertisements on the Internet Platform ImmobilienScout24," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 33, 09.
    2. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January.
    3. an de Meulen, Philipp & Micheli, Martin & Schaffner, Sandra, 2014. "Documentation of German real estate market data: Sample of real estate advertisements on the internet platform ImmobilienScout24, 2007-2013," RWI Materialien 80, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Luis Pereira & Pedro Coelho, 2013. "Estimation of house prices in regions with small sample sizes," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(2), pages 603-621, April.
    5. Monica Pratesi & Nicola Salvati, 2008. "Small area estimation: the EBLUP estimator based on spatially correlated random area effects," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 17(1), pages 113-141, February.
    6. Rüdiger Budde & Lea Eilers, 2014. "Sozioökonomische Daten auf Rasterebene - Datenbeschreibung der microm-Rasterdaten," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 19, 05.
    7. Charlotte Articus & Jan Pablo Burgard, 2014. "A Finite Mixture Fay Herriot-type model for estimating regional rental prices in Germany," Research Papers in Economics 2014-14, University of Trier, Department of Economics.
    8. Budde, Rüdiger & Eilers, Lea, 2014. "Sozioökonomische Daten auf Rasterebene: Datenbeschreibung der microm-Rasterdaten," RWI Materialien 77, RWI - Leibniz-Institut für Wirtschaftsforschung.
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    Cited by:

    1. Breidenbach Philipp & Schaffner Sandra, 2020. "Real estate data for Germany (RWI-GEO-RED)," German Economic Review, De Gruyter, vol. 21(3), pages 401-416, September.
    2. Vera Baye & Valeriya Dinger, 2024. "Investment incentives of rent controls and gentrification: Evidence from German micro data," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 52(3), pages 843-884, May.
    3. Breidenbach Philipp & Eilers Lea, 2018. "RWI-GEO-GRID: Socio-economic data on grid level," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(6), pages 609-616, October.
    4. Kaeding, Matthias, 2020. "Efficient Bayesian nonparametric hazard regression," Ruhr Economic Papers 850, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    Keywords

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    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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