On Choosing Among House Price Index Methodologies

Housing price indices estimated using 3 models with several sets of property transaction data are compared. The commonly used hedonic price model suffers from potential specification bias and inefficiency, while the weighted repeat-sales model presents potentially more serious bias and inefficiency...

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Bibliographic Details
Published inReal estate economics Vol. 19; no. 3; p. 286
Main Authors Case, Bradford, Pollakowksi, Henry O, Wachter, Susan M
Format Journal Article
LanguageEnglish
Published Bloomington Blackwell Publishing Ltd 01.09.1991
Subjects
Bias
Indexation
Market prices
Mathematical models
Real estate sales
Statistical analysis
Studies
United States > US
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Summary:Housing price indices estimated using 3 models with several sets of property transaction data are compared. The commonly used hedonic price model suffers from potential specification bias and inefficiency, while the weighted repeat-sales model presents potentially more serious bias and inefficiency problems. A hybrid model combining hedonic and repeat-sales equations avoids most of these sources of bias and inefficiency. The performance of each type of model is evaluated using a particularly rich local housing market database. The results, though ambiguous, appear to confirm the problems with the repeat sales model but suggest that systematic differences between repeat-transacting and single-transacting properties lead to bias in the hedonic and hybrid models as well. The comparison does not find clear efficiency gains from using the hybrid model, but it is hypothesized that this is a result of dissimilarities in the subsamples.
ISSN:1080-8620
1540-6229
DOI:10.1111/1540-6229.00554