Determinants of House Prices: A Quantile Regression Approach

Posted: 17 Aug 2008

See all articles by Joachim Zietz

Joachim Zietz

EBS University, EBS Business School

Emily Norman Zietz

Middle Tennessee State University - Department of Economics and Finance

G. Stacy Sirmans

Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law

Date Written: August, 14 2008

Abstract

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 autocorrection, 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.

Keywords: hedonic price function, quantile regression, spatial lag

JEL Classification: R31, C21, C29

Suggested Citation

Zietz, Joachim and Norman Zietz, Emily and Sirmans, G. Stacy, Determinants of House Prices: A Quantile Regression Approach (August, 14 2008). Journal of Real Estate Finance and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1226622

Joachim Zietz

EBS University, EBS Business School ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

Emily Norman Zietz

Middle Tennessee State University - Department of Economics and Finance ( email )

Murfreesboro, TN 37132
United States
615-895-6027 (Phone)

G. Stacy Sirmans (Contact Author)

Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law ( email )

College of Business
Tallahassee, FL 32306
United States
850-644-8214 (Phone)
850-644-4077 (Fax)

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