Determinants of House Prices: A Quantile Regression Approach
Rent the article at a discountRent now
* Final gross prices may vary according to local VAT.Get Access
OLS regression has typically been used in housing research to determine the relationship of a particular housing characteristic with selling price. Results differ across studies, not only in terms of size of OLS coefficients and statistical significance, but sometimes in direction of effect. This study suggests that some of the observed variation in the estimated prices of housing characteristics may reflect the fact that characteristics are not priced the same across a given distribution of house prices. To examine this issue, this study uses quantile regression, with and without accounting for spatial autocorrecation, to identify the coefficients of a large set of diverse variables across different quantiles. The results show that purchasers of higher-priced homes value certain housing characteristics such as square footage and the number of bathrooms differently from buyers of lower-priced homes. Other variables such as age are also shown to vary across the distribution of house prices.
- Anselin, L. (2001). Spatial econometrics. In B. H. Baltagi (Ed.), A companion to theoretical econometrics (pp. 310–330). Malden, MA and Oxford: Blackwell.
- Bartik, T. J. (1987). The estimation of demand parameters in hedonic price models. Journal of Political Economy, 95, 81–88. CrossRef
- Durlauf, S. N., & Young, H. P. (Eds.) (2001). Social Dynamics. Cambridge, MA: MIT.
- Epple, D. (1987). Hedonic prices and implicit markets: estimating demand and supply functions for differentiated products. Journal of Political Economy, 95, 59–80. CrossRef
- Gould, W. W. (1992). Quantile regression with bootstrapped standard errors. Stata Technical Bulletin, 9, 19–21.
- Gould, W. W. (1997). Interquantile and simultaneous-quantile regression. Stata Technical Bulletin, 38, 14–22.
- Greene, W. H. (2000). Econometric Analysis, 4th ed., Prentice Hall, Saddle River, N.J.
- Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153–161. CrossRef
- Kim, T.-H., & Muller, C. (2004). Two-stage quantile regression when the first stage is based on quantile regression. Econometrics Journal, 7, 218–231. CrossRef
- Kirman, A. P. (1992). Whom or what does the representative individual represent? Journal of Economic Perspectives, 6, 117–136.
- Koenker, R., & Bassett, G. (1978). Regression quantiles. Econometrica, 46, 33–50. CrossRef
- Koenker, R., & Hallock, K. F. (2001). Quantile regression. Journal of Economic Perspectives, 15, 143–156. CrossRef
- Malpezzi, S. (2003). Hedonic pricing models: A selective and applied review. In T. O. Sullivan & K. Gibbs (Eds.), Housing economics and public policy: Essays in honor of Duncan Maclennan. Oxford, UK: Blackwell.
- Malpezzi, S., Ozanne, L., & Thibodeau, T. (1980). Characteristic prices of housing in fifty-nine metropolitan areas, Research Report. Washington, DC: The Urban Institute, December.
- Newsome, B., & Zietz, J. (1992). Adjusting comparable sales using MRA—The need for segmentation. Appraisal Journal, 60, 129–135.
- Rogers, W. H. (1993). Calculation of quantile regression standard errors. Stata Technical Bulletin, 13, 18–19.
- Rosen, S. M. (1974). Hedonic prices and implicit markets: Product differentiation in pure competition. Journal of Political Economy, 82, 34–55. CrossRef
- Sirmans, G. S., Macpherson, D. A., & Zietz, E. N. (2005). The composition of hedonic pricing models. Journal of Real Estate Literature, 13 (1),3–46.
- Zietz, J., & Newsome, B. (2002). Agency representation and the sale price of houses. Journal of Real Estate Research, 24, 165–191.
- Determinants of House Prices: A Quantile Regression Approach
The Journal of Real Estate Finance and Economics
Volume 37, Issue 4 , pp 317-333
- Cover Date
- Print ISSN
- Online ISSN
- Springer US
- Additional Links
- Hedonic price function
- Quantile regression
- Spatial lag
- Industry Sectors
- Author Affiliations
- 1. Department of Economics and Finance, Middle Tennessee State University, Murfreesboro, TN, 37132, USA
- 2. Department of Economics and Finance, Middle Tennessee State University, P.O. Box 27, Murfreesboro, TN, 37132, USA
- 3. Department of Insurance, Real Estate and Business Law, The Florida State University, Tallahassee, FL, USA