Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets

Eric Belasco (), Michael C. Farmer () and Clifford A. Lipscomb ()
Additional contact information
Michael C. Farmer: Texas Tech University
Clifford A. Lipscomb: Greenfield Advisors LLC

Journal of Real Estate Research, 2012, vol. 34, issue 4, 577-594

Abstract: We use a finite mixture model to identify latent submarkets from household demographics that estimates a separate hedonic regression equation for each submarket. The method is a relatively robust empirical tool to extract submarkets from demographic information with far less effort than suspected. This method draws from latent class models to group observations in a straightforward, data-driven manner. Additionally, the unique information about each submarket is easily derived and summarized. Results are also shown to more convincingly sort submarkets than a prior study in the same area that used more comprehensive data.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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