EconPapers    
Economics at your fingertips  
 

Estimating House Price Indexes in the Presence of Seller Reservation Prices

William Goetzmann () and Liang Peng

The Review of Economics and Statistics, 2006, vol. 88, issue 1, 100-112

Abstract: We analyze a bias in transaction-based price indexes due to the presence of seller reservation prices. We develop a model in which the ratio of sellers' reservation prices to the market value affects trading volume and biases of observed transaction prices: when trading volume decreases (increases), index returns are estimated with an upward (downward) bias. We propose a new econometric procedure to mitigate the bias, and use simulations to demonstrate the effectiveness of the procedure. We construct a reserve-conditional unbiased index for the Los Angeles housing market, which substantially differs from a traditional repeat sale index. © 2006 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (33) Track citations by RSS feed

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/rest.2006.88.1.100 link to full text (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:restat:v:88:y:2006:i:1:p:100-112

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Amitabh Chandra, Olivier Coibion, Bryan S. Graham, Shachar Kariv, Amit K. Khandelwal, Asim Ijaz Khwaja, Brigitte C. Madrian and Rohini Pande

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by Ann Olson ().

 
Page updated 2020-09-12
Handle: RePEc:tpr:restat:v:88:y:2006:i:1:p:100-112