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Measuring Local Aggregate House Prices

Author

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  • Todd H. Kuethe

    (Economic Research Service, United States Department of Agriculture)

Abstract

This study evaluates the ability of a range of popular aggregate house price indexes to predict house prices out-of- sample at the transaction level for a small geographic area. The analysis particularly addresses the utility of spatial econometric methods. The results suggest that spatial econometric methods, which more explicitly consider the spatial aspects of observed house prices, provide better predictive accuracy as compared to more traditional estimation techniques, such as the repeat sales index, a hybrid repeat sales-hedonic price index, and hedonic price models estimated through least squares. The conclusions are drawn from a sample of 38,984 single-family residential real estate transactions for the city of Milwaukee, Wisconsin over the years 2002-2008.

Suggested Citation

  • Todd H. Kuethe, 2011. "Measuring Local Aggregate House Prices," International Real Estate Review, Global Social Science Institute, vol. 14(1), pages 118-129.
    • Handle: RePEc:ire:issued:v:14:n:01:2011:p:118-129
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    Cited by:

    1. Todd H. Kuethe, 2012. "Spatial Fragmentation and the Value of Residential Housing," Land Economics, University of Wisconsin Press, vol. 88(1), pages 16-27.

    More about this item

    Keywords

    House price index; Spatial econometrics; Forecast evaluation;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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