Abstract
This paper examines implicit price differences of rental housing characteristics across various property types to measure whether determinants of rents are valued in the aggregate or separately. The results show that hedonic price functions are not identical across property types, which suggests that ordinary least squares is not the appropriate estimation technique when modeling the implicit prices for an aggregate rental market. Generalized least squares estimation of a random coefficient model removes the restriction of fixed parameters imposed by OLS and allows estimation of implicit prices for rental markets containing multiple property types.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Goodman, A.C. (1978). “Hedonic Prices, Price Indexes and Housing Markets,”Journal of Urban Economics 5, 471–484.
Guash, J.L., and R.C. Marshall. (1987). “A Theoretical and Empirical Analysis of the Length of Residency Discount in the Rental Housing Market,”Journal of Urban Economics 22, 291–311.
Guntermann, K.L., and S. Norbin. (1987). “Explaining the Variability of Apartment Rents,”Journal of the American Real Estate and Urban Economics Association 15, 321–340.
Hsiao, C. (1986).The Analysis of Panel Data. Cambridge University Press.
Johnson, L.W. (1978). “Regression with Random Coefficients,”The International Journal of Management Science 6, 71–81.
Michaels, R.G., and V.K. Smith. (1990). “Market Segmentation and Valuing Amenities with Hedonic Models: The Case of Hazardous Waste Sites,”Journal of Urban Economics 28, 223–242.
Ogur, J.D. (1973). “Higher Education and Housing: The Impact of Colleges and Universities on Local Rental Housing Markets,”American Journal of Economics and Sociology 32, 387–394.
Rosen, S. (1974). “Hedonic Prices and Implicit Markets,”Journal of Political Economy 82, 34–55.
Rosenberg, S.M, and J.C. Corgel. (1990). “Agency Costs in Property Management Contracts,”Journal of the American Real Estate and Urban Economics Association 18, 184–201.
Schnare, A., and R. Struyk. (1976). “Segmentation in Urban Housing Markets,”Journal of Urban Economics 4, 146–166.
Shear, W.B. (1983). “A Note on Occupancy Turnover in Rental Housing Units,”Journal of the American Real Estate and Urban Economics Association 11, 525–538.
Sirmans, G.S., and J.D. Benjamin. (1991). “Determinants of Market Rent,”Journal of Real Estate Research 6, 357–379.
Sirmans, G.S., and C.F. Sirmans, (1991). “Property Manager Designations and Apartment Rent,”Journal of Real Estate Research 7, 91–98.
Sirmans, G.S., C.F. Sirmans, and J.D. Benjamin. (1989). “Determining Apartment Rent: The Value of Amenities, Services, and External Factors,”Journal of Real Estate Research 4, 33–44.
Sonstelie, J.C, and P.R. Portney. (1980). “Gross Rents and Market Values: Testing the Implications of Trebout's Hypothesis,”Journal of Urban Economics 7, 102–118.
Straszheim, M. (1973). “Estimation of the Demand for Urban Housing Services from Household Interview Data,”Review of Economics and Statistics 55, 1–8.
Swamy, P.A.V.B. (1970). “Efficient Inference in a Random Coefficient Model,”Econometrica 38, 311–323.
Tiao, G.C, and A. Goldberger. (1962). “Testing Equality of Individual Regression Coefficients,” WEBH Paper 6201, University of Wisconsin, Social Services Research Institute, Madison.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Allen, M.T., Springer, T.M. & Waller, N.G. Implicit pricing across residential rental submarkets. J Real Estate Finan Econ 11, 137–151 (1995). https://doi.org/10.1007/BF01098658
Issue Date:
DOI: https://doi.org/10.1007/BF01098658