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Delineating Urban Housing Submarkets with Fuzzy Clustering

Author

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  • Sungsoon Hwang

    (Department of Geography, DePaul University, 990 W Fullerton, Suite 4300, Chicago, IL 60614, USA)

  • Jean-Claude Thill

    (Department of Geography and Earth Sciences, University of North Carolina at Charlotte, 9201 University City Blvd-Charlotte, NC 28223, USA)

Abstract

It has long been argued that the housing market is spatially compartmentalized within a metropolitan area. The argument has important implications for explaining how the housing market works—should the status quo be seen as an equilibrium state? Or if no equilibrium is reached, how do loosely interlaced submarkets function both independently and interdependently? We note that the body of literature has leaned toward testing the distinctiveness of housing submarkets given a priori housing submarkets. However, there seems to be a lack of interest in developing methods for deriving housing submarkets empirically. Fuzzy clustering is well suited to this problem, given that the boundary of housing submarkets is not often sharply delineated. The study applies a fuzzy c -means (FCM) algorithm to identify housing submarkets in the Buffalo–Niagara Falls region. The study is distinct from other FCM applications in three respects. First, we reflect on issues tied to choosing parameters of fuzzy clustering. Second, we introduce overlap measures to characterize the relationship between the clusters produced. Third, we evaluate the performance of fuzzy clustering in terms of hedonic prediction accuracy. Results show that stratified hedonic models predict house price better than a market-wide hedonic model. Fuzzy clustering solutions also yield better prediction, compared with hard clustering.

Suggested Citation

  • Sungsoon Hwang & Jean-Claude Thill, 2009. "Delineating Urban Housing Submarkets with Fuzzy Clustering," Environment and Planning B, , vol. 36(5), pages 865-882, October.
    • Handle: RePEc:sae:envirb:v:36:y:2009:i:5:p:865-882
    DOI: 10.1068/b34111t
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    References listed on IDEAS

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    1. Bourassa, Steven C. & Hoesli, Martin & Peng, Vincent S., 2003. "Do housing submarkets really matter?," Journal of Housing Economics, Elsevier, vol. 12(1), pages 12-28, March.
    2. Rothenberg, Jerome & Galster, George C. & Butler, Richard V. & Pitkin, John R., 1991. "The Maze of Urban Housing Markets," University of Chicago Press Economics Books, University of Chicago Press, number 9780226729510, September.
    3. Mahlon R. Straszheim, 1975. "An Econometric Analysis of the Urban Housing Market," NBER Books, National Bureau of Economic Research, Inc, number stra75-1, June.
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    Cited by:

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    2. Ducksu Seo & You Seok Chung & Youngsang Kwon, 2018. "Price Determinants of Affordable Apartments in Vietnam: Toward the Public–Private Partnerships for Sustainable Housing Development," Sustainability, MDPI, vol. 10(1), pages 1-17, January.

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