Recent research in spatial real estate hedonic analysis

Excerpt

The analysis of real estate markets continues to be a prime area for the application and development of spatial analysis techniques. While spatial analytical approaches have become more widespread and accessible over the past decade to researchers and practitioners in a wide variety of disciplines (Páez et al. 2009), it is interesting to note that some early examples of the potential of both spatial econometric and geostatistical techniques include the analysis of property values reported in papers by Can (1992) and Dubin (1992). These early papers are notable because they demonstrated the use of different analytical approaches—spatially autoregressive models in the case of Can, and kriging in the case of Dubin. At the same time, they also identified a series of issues that stand at the cornerstone of spatial hedonic analysis. Of these issues, the identification of spatial autocorrelation and heterogeneity is a key, and these two effects have since been consistently found in other studies and with such frequency that it is no longer reasonable to dismiss them as statistical flukes or nuisances. On the contrary, while a strong economic theory of spatial externalities and segmentation in real estate markets has yet to be produced, a current consensus regarding the interpretation of spatial effects has already emerged. Thus, neighborhood effects are a commonly accepted interpretation of patterns of similarities observed in property prices above and beyond what can be explained by differences in structural and locational attributes (e.g. Baumont 2009; Chica-Olmo 1995; Pace et al. 1998; Tse 2002). Heterogeneity, on the other hand, is believed to be indicative of geographical segmentation of markets or buyers preferences (e.g. Bitter et al. 2007; Bourassa et al. 2003; Goodman and Thibodeau 2003; Páez et al. 2008b). The literature on spatial real estate hedonic analysis has so far demonstrated the importance of spatially explicit modeling to improve model quality and prediction accuracy. Substantive interpretation lends credence to the use of these methods. And the policy implications of spatial spillovers are increasingly recognized as a sufficient justification for the application of specialized approaches. Research continues to thrive as new substantive problems are identified, and methods are adopted, adapted, or newly developed to address emerging research needs. The papers collected for this thematic issue of Journal of Geographical Systems are a sample of research in an area that continues to attract attention for its methodological potential and practical importance. …