François Des Rosiers

Heterogeneity in hedonic modelling of house prices: looking at buyers’ household profiles

This paper introduces household-level data into hedonic models in order to measure the heterogeneity of implicit prices regarding household type, age, educational attainment, income, and the previous tenure status of the buyers. Two methods are used for this purpose: a first series of models uses expansion terms, whereas a second series applies Geographically Weighted Regressions. Both methods yield conclusive results, showing that the marginal value given to certain property specifics and location attributes do vary regarding the characteristics of the buyer’s household. Particularly, major findings concern the significant effect of income on the location rent as well as the premium paid by highly-educated households in order to fulfil social homogeneity.

The Impact of Surrounding Land Use and Vegetation on Single-Family House Prices

The aim of this paper is to assess the marginal effect of land-use locational externalities on the sale price of single-family houses, considering various spatial scales—in accordance with perception theories—and trade-off with accessibility to the city centre. From land-use and vegetation data derived from aerial photographs and Landsat TM satellite images, two sets of hedonic models, using OLS regression, are built from two samples of single-family properties sold in Quebec City. A standard model integrates property-specific factors, census factors, accessibility, and location attributes. In a second model, land-use and vegetation variables are considered on various spatial scales; a third step introduces the interaction effect of the surrounding land use with location, with car-time distance to the main activity centres being used as the main indicator. This allows for an analysis of the spatial variation of the environmental impact throughout the city considering relative proximity to the centre. The successful integration of environmental variables concerning location enhances our understanding of the local land-use and vegetation effects. It also improves the overall performance of the model while virtually removing spatial autocorrelation among residuals. Such models could be used in order to assess the fiscal impacts of various land zoning by law policies, thereby providing planning administrations with a useful decisionmaking tool.

Sorting out access and neighbourhood factors in hedonic price modelling

This paper investigates the analytical potential of factor analysis for sorting out neighbourhood and access factors in hedonic modelling using a simulation procedure that combines GIS technology and spatial statistics. An application to the housing market of the Quebec Urban Community (575,000 in population; study based on some 2,400 cottages transacted from 1993 to 1997) illustrates the relevance of this approach. In the first place, accessibility from each home to selected activity places is computed on the basis of minimum travelling time using the TransCAD transportation‐oriented GIS software. The spatial autocorrelation issue is then addressed and a general modelling procedure developed. Following a five‐step approach, property specifics are first introduced in the model; proximity and neighbourhood attributes are then successively added on. Finally, factor analyses are performed on each set of access and census variables, thereby reducing to six principal components an array of 49 individual attributes. Substituting the resulting factors for the initial descriptors leads to high model performances, controlled collinearity and stable hedonic prices, although remaining spatial autocorrelation is still detected in the residuals.

Shopping centres and house values: an empirical investigation

Focuses on the effect of both proximity and size of shopping centres on surrounding residential property values, using hedonic modelling. States that the data bank consists of a subset of some 4,000 single‐detached, owner‐occupied housing units transacted all over the Quebec Urban Community territory between January 1990 and December 1991. Tests several functional forms and uses up to 60 descriptors. Reveals that in line with previous studies, findings indicate that shopping‐centre size exerts a positive contributory effect on values; they also tend to confirm the non‐monotonicity of the price‐distance function. Concludes that, in that respect, resorting to the gamma function for distance variables yields most interesting results and provides consistent estimates of optimal distances for various shopping‐centre size categories.

Modelling interactions of location with specific value of housing attributes

This paper presents a procedure for considering interactions of neighbourhood quality and property specifics within hedonic models of housing price. It handles interactions between geographical factors and the marginal contribution of each property attribute for enhancing values assessment. Making use of simulation procedures, it is combining GIS technology and spatial statistics to define principal components of accessibility and socio‐economic census related to transaction prices of single‐family homes. An application to the housing market of the Quebec Urban Community (more than 3,600 bungalows transacted in 1990 and 1991) illustrates its usefulness for building spatial hedonic models, while controlling for multicollinearity, spatial autocorrelation and heteroskedasticity. Distance‐weighted averages of each property attribute in the neighbourhood and interactions of property attributes with each principal component are used to detect any spatial effect on sale price variations. This first‐stage spatial hedonic model approximates market prices, which are then used in order to compare “expected” and actual property tax amounts, which are added to obtain a second‐stage model incorporating fiscal effects on house values. Interactions between geographical factors and property specifics are computed using formulae avoiding multicollinearity problems, while considering several processes responsible for spatial variability. For each property attribute, they define sub‐models which can be used to map variations, across the city, of its marginal value, assessing the cross‐effect of geographical location (in terms of neighbourhood profiles and accessibility to services) and its own valuation parameters. Moreover, this procedure distinguishes property attributes, exerting a stable contribution to value (constant over the entire region) from those whose implicit price significantly varies over space.

Modelling accessibility to urban services using fuzzy logic

Purpose – This paper is an attempt to bridge the gap between, on the one hand, the mobility behaviour of households and their perception of accessibility to urban amenities and, on the other hand, house price dynamics as captured through hedonic modelling.Design/methodology/approach – In order to analyse the mobility behaviour of individuals and households, their sensitivity to travel time from home to service places is estimated so as to assess their perceived accessibility, using “subjective” indices based on actual trips, as reported in the 2001 origin‐destination survey designed for Quebec City. For comparative purposes, both objective and subjective accessibility indices based, in the former case on observed travel times and, in the latter case on fuzzy logic criteria, are computed and used as a complement to a centrality index in a hedonic model of house prices.Findings – Findings indicate that there are statistically significant differences in the way accessibility is structured depending on trip p...

Size and proximity effects of primary schools on surrounding house values

This paper deals with measuring the effect of both size and proximity of primary schools on surrounding residential values, using hedonics for that purpose. The data bank consists of a subset of some 4300 single-detached, owner-occupied housing units transacted all over the Quebec Urban Community territory between January 1990 and December 1991. Several functional forms are tested and up to 42 descriptors are used. Some 116 primary schools are considered in the analysis, with size ranging from 52 to 840 students. Findings tend to confirm the non-monotonicity of both the price–distance and price–size relationships with respect to primary schools. In that respect, performing a gamma transformation on either size and distance variables provides consistent estimates of critical school size and optimal distance to nearest school. The value-minimizing size is in the 300–450 pupil range while the optimal, or value-maximizing, distance is between 300 and 500 metres from the nearest school, that is, roughly, a 9–15-minute walk from home.

Environment and value Does drinking water quality affect house prices

This research paper investigates the effect of drinking water quality on property values in Charlesbourg, a major municipality (70,000 inhabitants) of the Quebec City region where repeated water‐related health problems were experienced in 1990 and 1991. In this paper, 807 bungalow sales are sampled from the data bank of the Quebec Urban Community (QUC) Appraisal Division, and environmental information pertaining to local drinking water quality levels supplements data on physical, neighbourhood and access attributes. Our findings indicate that water‐related health hazards exert a detrimental and measurable impact on higher property values, with the average duration of the warning period per sector clearly emerging as the dominant factor. More precisely, market segmentation suggests that the higher the price of the property, the sharper the decline in market value because of this factor. In the current case study, the most severely affected properties of the upper third segment of the market experienced drops in value ranging from 5.2 to 10.3 percent of mean sale price.

Does an improved urban bus service affect house values

ABSTRACT This study aims at testing whether, and to what extent, the overall quality in the supply of an urban bus service translates into higher house values for properties located along the lines; Quebec City, Canada, is used as a case study. The study relies on a database provided by the former Quebec Urban Community Assessment Division and, once filtered, includes 11,291 detached and attached single-family house sales that took place in Quebec City between January 1993 and February 1997. In addition to sale prices and conditions, property specifics, local amenity and taxation, time trend as well as socioeconomic and overall accessibility attributes, the database also includes mass transit (MT) network quality attributes accounting for bus frequency, route diversity and bus stop accessibility. Three bus service levels are considered—namely regular routes, the Metrobus and the Express—while four mutually exclusive buffer zones are used for measuring house value impacts. All information is handled through a regional geographic information system (GIS). The hedonic approach is resorted to in order to assess the magnitude and direction of MT-related externalities for properties located along bus routes and in the vicinity of bus stops. Findings suggest that increasing regular bus frequencies results, by and large, in lower house values for properties located in the vicinity of regular routes; and the reverse is true for Express lines, which exert a substantial, positive influence on prices. Thus, by offering a more direct and efficient (fewer stops) as well as more comfortable mode than both the regular and Metrobus services, the Express actually proves to be a convenient substitute to the private car for suburban homeowners with a regular working schedule. Findings also suggest that a greater destination choice for homeowners, expressed as the number of routes available within a five-minute walk from home, affects property values upward. Finally, the number of bus stops available at a distance of between 100 and 400 meters from home drives house prices down by a factor that lessens with distance. Thus, the additional noise and traffic disturbances thereby generated seem to prevail over an easier access to the MT network.

Using a Fourier polynomial expansion to generate a spatial predictor

Purpose - Spatial autocorrelation in regression residuals is a major issue for the modeller because it disturbs parameter estimates and invalidates the reliability of conclusions drawn from models. The purpose of this paper is to develop an approach which generates new spatial predictors that can be mapped and qualitatively analysed while controlling for spatial autocorrelation among residuals. Design/methodology/approach - This paper explores an alternate approach using a Fourier polynomial function based on geographical coordinates to construct an additional spatial predictor that allows to capture the latent spatial pattern hidden among residuals. An empirical validation based on hedonic modelling of sale prices variation using a large dataset of house transactions is provided. Findings - Results show that the spatial autocorrelation problem is under control as shown by low Morans Originality/value - The originality of this paper relies on the development of a new model that allows considering, simultaneously spatial and time dimension while measuring the marginal impact of environmental amenities on house prices avoiding competition with the weight matrix needed in most spatial econometric models.