HOUSINGNEWS REPORT
MY TAKE
The Role of Bargaining, Search and Psychology for Housing Prices
Jaren Pope
Jaren Pope is an Associate Professor in the Department of Economics at Brigham Young University. Jaren’s primary research areas are behavioral, environmental and urban economics. Much of his work has been focused on using property value information and quasi- experimental hedonic techniques to understand how households value environmental and urban amenities.
BY JAREN C. POPE, ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, BRIGHAM YOUNG UNIVERSITY.
Understanding the role of key housing characteristics in explaining housing prices is of critical importance to real estate professionals. Two residential homes in the same housing market will sell for very different amounts if the two homes differ on key characteristics such as location, the time at which they sold, their size (both house and lot), the quality of their construction, their age, and many other characteristics of those homes under consideration.
According to economists, the functional relationship between housing characteristics and housing prices is the “Hedonic Price Function” (see Rosen (1974) for the seminal paper in economics). Economists use regression techniques to estimate this functional relationship in an effort to understand the relative contributions of specific housing characteristics to the sales prices of homes in a housing market.
JUNE 2017
ATTOM DATA SOLUTIONS • P11
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