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Robust estimation of hedonic models of price and income for investment property

Christian Janssen (Faculty of Business, University of Victoria, Victoria, Canada)
Bo Söderberg (Real Estate Economics, Royal Institute of Technology, Stockholm, Sweden)
Julie Zhou (Department of Mathematics and Statistics, University of Victoria, Victoria, Canada)

Journal of Property Investment & Finance

ISSN: 1463-578X

Publication date: 1 August 2001

Abstract

Real estate market data often contain outliers in the observations. Since outliers have a large influence on least squares estimates, robust regression methods have been recommended for this situation. Compares the performance of least squares and least median of squares, a robust method, in the estimation of price/income relationships for apartment buildings. Multiplicative models with multiplicative errors are estimated by means of natural log transformations. The study confirms the importance of employing robust methods for this application and implies this may well be so for real estate data sets more generally.

Keywords

Citation

Janssen, C., Söderberg, B. and Zhou, J. (2001), "Robust estimation of hedonic models of price and income for investment property", Journal of Property Investment & Finance, Vol. 19 No. 4, pp. 342-360. https://doi.org/10.1108/EUM0000000005789

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Publisher

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MCB UP Ltd

Copyright © 2001, MCB UP Limited

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