Hedonic Index Research Articles

A Regional Analysis of the Impacts of Changes in Housing Values on Property Tax Assessment During and After the 2008 Financial Crisis

This study examines the relationship between changing house prices and assessed value in the Detroit Michigan region. Using parcel-level data from 2008 through 2016, we construct a Hedonic Housing Price Index and an Assessed Value Index for 120 Michigan assessing jurisdictions in the five-county region surrounding Detroit (Macomb, Monroe, Oakland, Washtenaw, and Wayne). Our findings are consistent with the literature, indicating at least a three-year lag between changes in house prices and changes in property assessments. Communities considered to be distressed tended to over-assess properties before the crisis, but these communities recalibrated assessments to better align with market conditions after the financial crisis. Our evaluation also shows that while assessed values decreased more slowly than housing prices fell during the crisis, assessed values tended to fall to even deeper levels than housing prices over a longer time horizon. JEL Codes: H71, H83, G01

Housing affordability and housing demand assessment for urban poor in India using the hedonic model

Purpose This study aims to assess housing affordability and estimate demand using a hedonic regression model in the context of Lucknow city, India. This study assesses housing affordability by considering various housing and household-related variables. This study focuses on the impoverished urban population, as they experience the most severe housing scarcity. This study’s primary objective is to understand the demand dynamics within the market comprehensively. An understanding of housing demand can be achieved through an examination of its characteristics and components. Individuals consider the implicit values associated with various components when deciding to purchase or rent a home. The components and characteristics have been obtained from variables relating to housing and households. Design/methodology/approach A socioeconomic survey was conducted for 450 households from slums in Lucknow city. Two-stage regression models were developed for this research paper. A hedonic price index was prepared for the first model to understand the relationship between housing expenditure and various housing characteristics. The housing characteristics considered for the hedonic model are dwelling unit size, typology, condition, amenities and infrastructure. In the second stage, a regression model is created between household characteristics. The household characteristics considered for the demand estimation model are household size, age, education, social category, income, nonhousing expenditure, migration and overcrowding. Findings Based on the findings of regression model results, it is evident that the hedonic model is an effective tool for the estimation of housing affordability and housing demand for urban poor. Various housing and household-related variables affect housing expenditure positively or negatively. The two-stage hedonic regression model can define willingness to pay for a particular set of housing with various attributes of a particular household. The results show the significance of dwelling unit size, quality and amenities (R2 > 0.9, p < 0.05) for rent/imputed rent. The demand function shows that income has a direct effect, whereas other variables have mixed effects. Research limitations/implications This study is case-specific and uses a data set generated from a primary survey. Although household surveys for a large sample size are resource-intensive exercises, they provide an opportunity to exploit microdata for a better understanding of the complex housing situation in slums. Practical implications All the stakeholders can use the findings to create an effective housing policy. The variables that are statistically significant and have a positive relationship with housing costs should be deliberated upon to provide the basic standard of living for the urban poor. The formulation of policies should duly include the housing preferences of the economically disadvantaged population residing in slum areas. Originality/value This paper uses primary survey data (collected by the authors) to assess housing affordability for the urban poor of Lucknow city. It makes the results of the study credible and useful for further applications.

The protective combined effect of chitosan and essential oil coatings on cheese and cured meat against the oviposition of Piophila casei

This study investigated the effect of chitosan (CHT) incorporated with essential oils (EOs) from three plants: Laurus nobilis L. (bay leaf), Piper nigrum L. (black pepper), and Cinnamomum verum J. Presl (cinnamon) on fresh foods. A panel of expert sensory analysts selected the best EO olfactory profile to be used with cheese and cured meat. The components of EOs were studied by gas chromatography coupled with mass spectrometry (GC-MS). Bay leaf EO was mainly rich in 1,8-cineole (28.1%), while black pepper was mainly characterized by β-caryophyllene (45.7%) and cinnamon was dominated by (E)-cinnamaldehyde (85.5%). The food samples were divided into four groups and subjected to the following treatments: control, chitosan (CHT), EO, and CHT + EO at different concentrations to determine their influence on the oviposition behavior of Piophila casei over time. Under those conditions, the best concentration of EO to be used to control the P. casei oviposition was assessed. The samples coated with CHT + EOs showed the highest efficacy in controlling the oviposition behavior of P. casei as the treatment was able to decrease the oviposition percentage from 40 to 80% (control) to 5–10%. The EOs of bay leaf (1%) and black pepper (0.5%) were pinpointed as the best choices because they totally controlled the oviposition. Besides, the panelists accepted their sensory profile, overall pleasantness, and hedonic index with the highest scores. Therefore, the use of a CHT mixed with EOs was the most effective solution to repel P. casei without negatively affecting the organoleptic qualities of the treated foods.

New Characteristics and Hedonic Price Index Numbers

Abstract Changes in product characteristics on the extensive margin (the addition of new features and the removal of old ones) are an important and hitherto neglected dimension of quality change. Standard techniques for adjusting price indices for new goods cannot handle such changes satisfactorily, and this leads to an economically and statistically significant bias in the measurement of prices and real output. We combine insights from the theories of exact index numbers and demand for characteristics to develop a new method for incorporating changes on the extensive characteristic margin. Applied to U.K. data on new car sales, our method leads to revisions in estimated inflation rates for this commodity group that are both plausible and quantitatively important.

Tracking Home-Owners’ Sentiments: Subjective Indices and Convergent Validity

Abstract Surveys regularly ask home-owners to guess what their property might be worth in the current housing market. We develop suitable statistical techniques to construct hedonic and repeat-sales style house price indices from these owner-estimated values (OEVs). The resulting series are then linked to a large set of quality-adjusted residential property price indices estimated from transaction data allowing us to perform a variety of convergent validity tests. Based on results for 20 countries, several decades and different OEV elicitation techniques, we conclude that the “wisdom of the home-owner crowd” is sufficient to study objective house price dynamics. Yet, surveys fail to accurately measure house price levels.

Residential Real Estate as a Potential Hedge of Capital Against Inflation

ABSTRACT There is a belief among investors that real estate is an excellent way to protect capital from depreciation due to inflation. Research does not provide a clear answer as to whether this investors’ belief is correct, but some approaches indicate that simple econometric methods are not able, especially in the short term, to clearly indicate the existence of a relationship between inflation and property prices (Fogler, 1984). The purpose of the study –was to find the relationship between residential real estate prices and inflation in the Polish economic conditions. Methodology of the study - the study used cointegration analysis with the Engle - Granger test. The research was carried out in the period from the first quarter of 2009 to the fourth quarter of 2021. The real estate hedonic indices calculated by NBP (National Bank of Poland) and the actual and forecasted inflation rates published by the GUS (Central Statistical Office) and the NBP (National Bank of Poland) were used in the research. The result - the analysis led to a negative verification of the research hypothesis, as it could not be proved that real estate prices were related to the level of inflation during the researched period. Originality/value - the study fills a gap in the Polish market regarding the analysis of the possibility of using real estate as a hedge against inflation. The research concerned only the Polish market, but this issue has not been taken up for years, also in mature economies.

Examining key macroeconomic determinants of serviced apartments price index: the case of Kuala Lumpur, Malaysia

PurposeIncreasing overhang of serviced apartments poses a serious concern to the national property market. This study aims to examine the impacts of macroeconomic determinants, namely, gross domestic product (GDP), consumer confidence index (CF), existing stocks (ES), incoming supply (IS) and completed project (CP) on serviced apartment price changes.Design/methodology/approachTo achieve more accurate, quality price changes, a serviced apartment price index (SAPI) was constructed through a self-developed hedonic price index model. This study has collected 1,567 transaction data in Kuala Lumpur, covering 2009Q1–2018Q4 for price index construction and data were analysed using the vector autoregressive model, the vector error correction model and the fully modified ordinary least squares (OLS) (FMOLS).FindingsResults of the regression model show that only GDP, ES and IS were significantly associated with SAPI, with an R2 of 0.7, where both ES and IS have inverse relationships with SAPI. More precisely, it is predicted that the price of serviced apartments will be reduced by 0.56% and 0.21% for every 1% increase in ES and IS, respectively.Practical implicationsTherefore, government monitoring of serviced apartments’ future supply is crucial by enforcing land use-planning regulations via stricter development approval of serviced apartments to safeguard and achieve more stable property prices.Originality/valueBy adopting an innovative approach to estimating the response of price change to supply and demand in a situation where there is no price indicator for serviced apartments, the study addresses the knowledge gap, especially in terms of understanding what are the key determinants of, and to what extent they influence, the SAPI.

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

Quality Adjustment at Scale: Hedonic vs. Exact Demand-Based Price Indices

Using Machine Learning to Construct Hedonic Price Indices

Using Machine Learning to Construct Hedonic Price Indices

Using Machine Learning to Construct Hedonic Price Indices

Using Machine Learning to Construct Hedonic Price Indices

Hedonic Price Index Number for Blocks of Flats and Terraced Houses in Finland

Hedonic Price Index Number for Blocks of Flats and Terraced Houses in Finland

Transparent Design-Based Alternative to Hedonic Index Numbers with Complete Micro Data

Transparent Design-Based Alternative to Hedonic Index Numbers with Complete Micro Data

Investments in Bonds, Stocks, Gold and Real Estate as a Hedge Against Inflation

In times of accelerating inflation, financial instruments that protect capital against loss of value are becoming increasingly important. Therefore, an open question remains as to what to invest in to, if not outstrip, at least keep up with the inflation rate in the case of return on investments. This raises the question of whether there are such opportunities in the market. However, according to some authors, this type of analysis is not easy and simple econometric methods are not able to show the appropriate dependencies. An example is real estate investment, which, especially in the short term, may not be a suitable inflation hedge. The purpose of the study is to determine whether investments in the Polish capital market are able to protect capital from depreciation due to inflation. The study began with the analysis of distributions, stationarity of returns and correlation of successive investments and the CPI inflation rate, ending with cointegration analysis using the Engle–Granger test. The analysis was performed from the first quarter of 2009 to the fourth quarter of 2021. The following indices were used for the study: the TBSPIndex from the bond market, the WIG from the stock market, gold prices in PLN, the NBP hedonic index of real estate prices in seven largest Polish cities and CPI inflation rates published by Statistics Poland (GUS). The analysis led to a negative verification of the research hypothesis, as it could not be proved that the analysed indices and prices are related to the level of inflation. The study fills a gap in the Polish market for analysis of capital protection against inflation. The research concerns only the Polish market, however this issue has not been discussed for years in mature economies either.

Short-run impact of the Ukrainian refugee crisis on the housing market in Poland

This study analysed the impact of the Russian aggression against Ukraine in February 2022 on rental and housing prices in Warsaw and Krakow, two major cities in Poland. We hypothesize that the tremendous urban population growth (by 15% in Warsaw and 23% in Krakow) in a short period generated a housing demand shock, which, combined with constrained availability, resulted in extraordinary changes in prices and rents. Quantile hedonic indices indicated a significant increase in rents since the beginning of the Russian invasion in both markets, which were affected by the refugee shock. However, similar effects were not observed in the case of housing prices. In March and April of 2022, rents increased by around 16.5% in Krakow and 14% in Warsaw, while housing prices in both cities rose by much less (by about 4.0% in Krakow and 1% in Warsaw). Using Bayesian Structural Time Series models, we demonstrated that this abnormal rent increase is not random, and we concluded that the inflow of Ukrainian refugees most likely caused it.

Postharvest Treatments on Sensorial and Biochemical Characteristics of Begonia cucullata Willd Edible Flowers.

Edible flowers (EFs) are currently consumed as fresh products, but their shelf life can be extended by a suitable drying technique, avoiding the loss of visual quality and valuable nutraceutical properties. Begonia cucullata Willd is a common ornamental bedding plant, and its leaves and flowers are edible. In this work, B. cucullata red flowers were freeze-dried (FD) and hot-air dried (HAD) at different temperatures. To the best of our knowledge, our study is the first one comparing different drying methodologies and different temperatures involving sensory characterization of EFs; therefore, a codified method for the description of the sensory profile of both fresh and dried B. cucullata was developed and validated. Phytochemical analyses highlighted the better preservation of antioxidant compounds (polyphenols, flavonoids and anthocyanins) for flowers dried at 60–70 °C. Visual quality was strongly affected by the drying treatments; in particular the color of the HAD samples significantly turned darker, whereas the FD samples exhibited a marked loss of pigmentation. Although all drying conditions led to a reduction in the hedonic indices if compared with fresh flowers, the best results in terms of organoleptic properties were obtained when the drying temperature was set to 60 or 70 °C.

Econometric Issues in Hedonic Property Price Indices: Some Practical Help

Abstract Hedonic regressions are widely used and recommended for property price index (PPI) measurement. Hedonic PPIs control for changes in the quality-mix of properties transacted that can confound measures of change in average property prices. The widespread adoption of the hedonic approach is primarily due to the increasing availability, in this digital age, of electronic data on advertised and transaction prices of properties and their price-determining characteristics. Yet hedonic PPIs are only as good as the underlying estimated hedonic regressions. Regression-based measures are unusual in official economic statistics. There is little technical support in the international Handbooks and Guides for diagnostic measures and graphical plots for estimated regression equations as applied to PPIs. These diagnostics are essential to the transparency and credibility of hedonic PPI measurement. This article seeks to remedy this.

Measuring Trends in Western Water Prices

AbstractThis study updates analysis of western water markets with data from thirteen river basins in eight states based on analysis of over 7,000 transactions from 2002 to 2019. We take a new approach to characterizing the time trend in prices across basins by estimating hedonic price indices. In doing so, we do not attempt to explain how prices are determined but rather to characterize general price movements across the region. There have been nine widely cited analyses of trends in western water rights prices and trading. Since 2010, when Stratecon ceased publishing the Water Strategist, no one has extended this time series until now (Stratecon Inc. Accessed January 25, 2021). Researchers, planners, and investors remain keenly interested in water markets, but limited historic data are available on general water right price trends and volatility. Understanding general price movements over time help to fill this gap. Our analysis confirms the findings of earlier studies that urban buyers systematically pay premium prices relative to agricultural or environmental buyers, and that prices vary significantly within basins, across basins and states, and over time. Results from the pooled‐period method indicate an annual rate of appreciation of around 2.8% and results from the adjacent‐period method indicate a rate of 5.1%. Both methods suggest that water right prices from 2002 to 2019 have increased at a rate similar to the general price level.

Research on the Impact of Market Concern for Real Estate Policy on Housing Prices: Evidence from Internet Search and Hedonic Price Theory

To avoid the effects of systemic financial risks caused by extreme fluctuations in housing price, the Chinese government has been exploring the most effective policies for regulating the housing market. Measuring the effect of real estate regulation policies has been a challenge for present studies. This study innovatively employs big data technology to obtain Internet search data (ISD) and construct market concern index (MCI) of policy, and hedonic price theory to construct hedonic price index (HPI) based on building area, age, ring number, and other hedonic variables. Then, the impact of market concerns for restrictive policy, monetary policy, fiscal policy, security policy, and administrative supervision policy on housing prices is evaluated. Moreover, compared with the common housing price index, the hedonic price index considers the heterogeneity of houses and could better reflect the changes in housing prices caused by market supply and demand. The results indicate that (1) a long-term interaction relationship exists between housing prices and market concerns for policy (MCP); (2) market concerns for restrictive policy and administrative supervision policy effectively restrain rising housing prices while those for monetary and fiscal policy have the opposite effect. The results could serve as a useful reference for governments aiming to stabilize their real estate markets.