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Semi-Parametric Interpolations of Residential Location Values: Using Housing Price Data to Generate Balanced Panels

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Abstract

We estimate location values for single family houses by local polynomial regressions (LPR), a semi-parametric procedure, using a standard housing price and characteristics dataset. As a logical extension of the LPR method, we interpolate land values for every property in every year and validate the accuracy of the interpolated estimates with an out-of-sample forecasting approach using Denver sales during 2003 through 2010. We also compare the LPR and OLS models out-of-sample and determine that the LPR model is more efficient at predicting location values. In a balanced panel application, we use GMM estimation to examine how the location value estimates are affected by airport infrastructure investments.

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  • John M. Clapp & Jeffrey P. Cohen & Cletus C. Coughlin, 2014. "Semi-Parametric Interpolations of Residential Location Values: Using Housing Price Data to Generate Balanced Panels," Working Papers 2014-50, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2014-050
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    Cited by:

    1. Jeffrey P. Cohen & Cletus C. Coughlin & John M. Clapp, 2017. "Local Polynomial Regressions versus OLS for Generating Location Value Estimates," The Journal of Real Estate Finance and Economics, Springer, vol. 54(3), pages 365-385, April.

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    More about this item

    Keywords

    Land Values; Semi-Parametric Estimation; Local Polynomial Regressions; Balanced Panel; Fixed Effects;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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