Renovations and the Repeat-Sales House Price Index

James Bugden

No 2013.08, Working Papers from School of Economics, La Trobe University

Abstract: In the standard repeat-sales method, the maintained assumption is that the quality does not change between a house?s two sale dates. This assumption has been called into question. In particular quality changes from renovations carried out between a house?s two sales are not accounted for in the repeat-sales method. In this paper, I construct a novel way to incorporate renovations into the repeat-sales regression that controls for changes in housing quality between sales. The attractiveness of the method I propose is that it is consistent with the underlying hedonic theory, yet maintains the parsimony and simplicity of the repeat-sales method. Moreover, I am able to specify the exact way that ren- ovations enter the repeat-sales regression thus avoiding econometric problems related to mis-speci?cation of the functional form.

Keywords: Price Indices; Repeat-Sales; Renovations; Housing (search for similar items in EconPapers)
JEL-codes: C43 R31 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2013
New Economics Papers: this item is included in nep-ure
Note: ISSN-1837-2198
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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