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Location, Location, Location: Extracting Location Value from House Prices

Jens Kolbe, Rainer Schulz, Martin Wersing () and Axel Werwatz

No 1216, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The price for a single-family house depends both on the characteristics of the building and on its location. We propose a novel semiparametric method to extract location values from house prices. After splitting house prices into building and land components, location values are estimated with adaptive weight smoothing. The adaptive estimator requires neither strong smoothness assumptions nor local symmetry. We apply the method to house transactions from Berlin, Germany. The estimated surface of location values is highly correlated with expert-based land values and location ratings. The semiparametric method can therefore be used for applications where no other location value information exists or where this information is not reliable.

Keywords: Location value; adaptive weight smoothing; spatial modeling (search for similar items in EconPapers)
JEL-codes: R31 C14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-geo and nep-ure
Date: 2012
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