Age, Time, Vintage, and Price Indexes: Measuring the Depreciation Pattern of Houses
44 Pages Posted: 23 Feb 2016 Last revised: 24 Feb 2016
Date Written: February 17, 2016
Age, time and vintage are key determinants of house prices, yet they cannot be included together linearly or as dichotomous variables in hedonic regressions as construction time plus age of house = sale time. We introduce a method where the estimates of the age, time and vintage effects on prices are obtained in a flexible manner, without requiring us to specify a pre-determined functional form for either of these variables. Applying our method to Dutch data, we find that the estimated depreciation pattern over the life of houses does not follow the functional forms typically specified for the age of houses in hedonic regressions.
Keywords: Age-price profile, capital formation, hedonic regressions, GEKS index
JEL Classification: C43, E01, E31, R31
Suggested Citation: Suggested Citation