Using quantile regression in hedonic analysis to reveal submarket competition

Michael C. Farmer, Clifford A. Lipscomb

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

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.

Original languageEnglish
Pages (from-to)435-460
Number of pages26
JournalJournal of Real Estate Research
Volume32
Issue number4
StatePublished - 2010

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