A Neural Network Analysis of the Effect of Age on Housing Values

A. Quang Do and G. Grudnitski
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A. Quang Do: Department of Finance San Diego State University San Diego, California 92182, http://npv.sdsu.edu/
G. Grudnitski: School of Accountancy San Diego State University San Diego, California 92182, http://www-rohan.sdsu.edu/dept/cbaweb/departments/acct.html

Journal of Real Estate Research, 1993, vol. 8, issue 2, 253-264

Abstract: Empirical studies using multiple regression find the value of a residential property declines with its age. Because these results confirm the fact of physical deterioration of a house over time, little attention is paid to the statistical technique's inherent shortcomings. Accordingly, this paper uses a neural network, which is able to overcome multiple regression's methodological problems, to re-examine the effect of age on a house's value. We find that a negative relationship of value to age holds only for the first sixteen to twenty years of the life of a house. Then, not only does the decline in value stop, but a house actually starts to experience appreciation related, in part, to its lot size.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1993
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Citations: View citations in EconPapers (15)

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