A Hybrid Approach to Real Estate Price Definition: A Case Study in Western Switzerland

Maurin Baillif, Matthieu de Lapparent and Evanthia Kazagli

Revue économique, 2021, vol. 72, issue 6, 1055-1077

Abstract: Accurate estimation of property prices is a key issue within a heterogeneous market where submarkets may exist without the identification criteria being known or measurable. We propose a discrete mixture of market hedonic-pricing model implementing a simulated expectation-maximization algorithm and an accuracy criterion to evaluate the differences between the latent class model and the classical hedonic pricing model. The methodology is applied to rent data from Western Switzerland, spatially augmented using only open source data. The results demonstrate that the use of the proposed approach improves the precision of rent determination. JEL codes: C51, C52, C53, D41, R31.

Keywords: real estate; price definition; hedonic regression; latent class; simulated expectation-maximization algorithm (SEM) (search for similar items in EconPapers)
JEL-codes: C51 C52 C53 D41 R31 (search for similar items in EconPapers)
Date: 2021
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