Using Quantile Regression in Hedonic Analysis to Reveal Submarket Competition

27 Pages Posted: 21 Dec 2013

See all articles by Michael C. Farmer

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: 2010

Abstract

In this paper, we use quantile regression analysis to explore the role submarket competition plays in setting housing prices in those price ranges where different submarkets occupy homes of similar price. We find evidence of direct competition between submarkets with different preferences for at least some homes in a single neighborhood. By examining hedonic parameter instability at different housing price levels, we uncover not only latent diversity among homeowners but direct competition between them, which calls into question policy and market conclusions drawn from standard hedonic price models, especially large sample hedonic studies.

Suggested Citation

Farmer, Michael C. and Lipscomb, Clifford A., Using Quantile Regression in Hedonic Analysis to Reveal Submarket Competition (2010). Journal of Real Estate Research, Vol. 32, No. 4, 2010, Available at SSRN: https://ssrn.com/abstract=2370382

Michael C. Farmer (Contact Author)

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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