Using a finite mixture model of heterogeneous households to delineate housing submarkets

Eric Belasco, Michael C. Farmer, Clifford A. Lipscomb

Research output: Contribution to journalArticle

7 Scopus citations

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.

Original languageEnglish
Pages (from-to)577-594
Number of pages18
JournalJournal of Real Estate Research
Volume34
Issue number4
StatePublished - 2012

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