Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets

18 Pages Posted: 23 Jan 2013

See all articles by Eric Belasco

Eric Belasco

Texas Tech University

Michael C. Farmer

Texas Tech University - Department of Agricultural and Applied Economics

Clifford A. Lipscomb

Bartow Street Capital LLC; Georgia Institute of Technology

Date Written: 2012

Abstract

We use a finite mixture model to identify latent submarkets from household demographics that estimates a separate hedonic regression equation for each submarket. The method is a relatively robust empirical tool to extract submarkets from demographic information with far less effort than suspected. This method draws from latent class models to group observations in a straightforward data-driven manner. Additionally, the unique information about each submarket is easily derived and summarized. Results are also shown to more convincingly sort submarkets than a prior study in the same area that used more comprehensive data.

Keywords: demographic, submarket

Suggested Citation

Belasco, Eric and Farmer, Michael C. and Lipscomb, Clifford A., Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets (2012). Journal of Real Estate Research, Vol. 34, No. 4, 2012, Available at SSRN: https://ssrn.com/abstract=2205224

Eric Belasco (Contact Author)

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Michael C. Farmer

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Suite 167, 2625 Memorial Circle
TTU Administration
Lubbock, TX 79409
United States

Clifford A. Lipscomb

Bartow Street Capital LLC ( email )

106 N. Bartow Street
Cartersville, GA 30120
United States
770-334-3952 (Phone)

Georgia Institute of Technology ( email )

685 Cherry St.
Atlanta, GA 30332-0345
United States

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