Economics, Econometrics and Finance
8 years ago

New method revolutionizes real estate price index construction for accuracy.

Journal of the American Statistical Association
A Regression Method for Real Estate Price Index Construction
Martin J. Bailey, Richard F. Muth, Hugh O. Nourse

Paper Summary

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The article presents a method for creating real estate price indexes by analyzing sales prices of the same property at different times. By using regression analysis, the researchers were able to efficiently estimate the price index by combining price relatives of repeat sales. This method allows for the elimination of certain effects on property values and provides a way to compute standard errors for the estimated index numbers.