By Selma Lewis, Research Economist
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- The exhibit below shows the top five characteristics by eight categories used by academics when analyzing home values. The exhibit shows the total number of times a characteristic has been used in the studies and the number of times its estimated effect has been positive, negative, or not significant.
- In the structural category, the most common are lot size, square feet, age, number of bathrooms and bedrooms. All these boost the value of a home.
- The most frequent internal features are full bathrooms, half bathrooms, fireplace, air-conditioning, hardwood floors and basement. These characterises almost always boost the value of home, but sometimes do decreases or do not have any effect.
- External features that are most often mentioned are garage and garage spaces, deck, pool, porch, carport. All these help the value except the carport which decreased the price in one case.
- Environmental features including “views” all help to boost the price.
- Environmental characteristics due to location of the property, such as location within the metropolitan area, crime, distance, golf course and trees are all important.
- Other environmental features resulting from public services include the school district, percentage of minority in school district and access to a public sewer. In general, perceived school quality has a significant impact on house prices. Marketing, occupancy and selling characteristics include the assessor’s judgment of quality, the assessed condition of the house, whether the house is vacant at the time of sale, whether the house is owner occupied, and DOM. Measures of quality all help increase home prices, as does the owner-occupancy. Being vacant and lingering for a long time on the market have negative effect while other time trend variables do not show significance.
- The last category, financial issues, include financing, foreclosures situation and property taxes.
- Source: Macpherson, David A., Sirmans, G. Stacy, Zietz, Emily N. The Composition of Hedonic Pricing Models. Journal of Real Estate Literature; 2005, Vol. 13 Issue 1, p3-43, 41p, 21 charts
Copyright National Association of REALTORS®, Reprinted with permission.
