The practice of reproducible research, a central component of the burgeoning ‘open science’ movement, has been thrust in the public spotlight over past few years. This study oﬀers an overview of reproducibility in science, reviews speciﬁc concerns for the real estate ﬁeld and surveys the current policy regarding reproduciblity among top real estate journals. Performing research reproducibly requires a change from the status quo and represents an educational issue. Toward that end, the second half of this paper demonstrates reproducible research via a fully documented and freely-available example of a reproducible hedonic price analysis complete with all data, code and results hosted on-line.
Like most industries, the real estate profession is becoming increasingly dependent on data rich and statistical analyses. As a result, the quality of the underlying data on which these techniques depend is critically important. Very little discussion in the real estate literature or the classroom, however, is given to acquiring, managing, cleaning, and preparing these large datasets (collectively, the data preparation process). Often these tasks are left for researchers to learn ‘on the job.’ In this paper we examine the general state of real estate data, the existing research on the data preparation process and provide common examples of issues encountered while working with property-level data. We direct special attention to the characteristics that make working with real estate data highly unique and occasionally very difficult: it is largely un-standardized, often lacks sufficient labeling and is spatial and temporal in nature. We conclude by examining a sample of published research from the Journal of Real Estate Research, Real Estate Economics (formerly AREUEA) and the Journal of Real Estate Finance and Economics to gauge how documentation of the data preparation process in peer-reviewed literature has changed over time.
Bitter, C. and Krause A. (2016) The Influence of Urban Design Packages on Home Values. International Journal of Housing Market Analysis, Forthcoming.
Purpose – The purpose of this study is to examine the impact of neighborhood design templates on residential home values in King County, WA, USA. Previous research examines a number of individual design factors; the research here combines these factors into typologies and tests for the impacts of the composite set of design features.
Design/methodology/approach – We analyze over 27,000 home sales with a hedonic price model to measure the impacts across three large, regional submarkets. Neighborhood design categories are developed using a cluster analysis on a set of individual neighborhood attributes.
Findings – The key finding from this research is that the impact of more traditional (“urban”) design packages on home values is highly contextual. For the older and denser neighborhoods in the study area, more traditional design results in a significantly positive impact on home values. In the new and more suburban regions of the study area this effect is not found.
Originality/value – Prior work has focused on valuing design attributes individually. We argue that neighborhood design is better conceived of as a ‘package’, as the value of a given design element may depend on other co-located attributes. This is the first study, to our knowledge, to treat physical neighborhood design variables as a composite whole and to attempt to value their impact on home values as such.
Keywords: Neighborhood Design; Neighborhood Attributes; Cluster Analysis; House Price Impacts; Submarket Delineation
Sim, E., Krause, A. and Winson-Geideman, K. (2016) The Impact of Transit Oriented Development (TOD) on Residential Property Prices: The case of Box Hill, Melbourne. Paciﬁc Rim Property Research Journal, 21(3), 199-214.
Transit oriented design (TOD) – an increase in density around transit stations – has arisen in many of Australia’s capital cities as a way to encourage mass transit ridership as well as to efficiently utilise the increase in foot and vehicle traffic that transit stations create. However, the implementation of TODs in Melbourne has faced strong opposition due to residents’ perception that the disamenities of a TOD will outweigh the benefits resulting in negative impacts on property prices. This research analyses the relationship between proximity to a TOD and residential home prices. Results indicate that proximity to a TOD is positively related to property prices, even after controlling for neighborhood factors such as street connectivity and overall land use mix. By testing a variety of transformations of distance, we find that the benefits of TOD proximity extend approximately 1250 meters from the Box Hill station. From a methodological standpoint, we find that more flexible treatments of distance variables in spatial autoregressive and spline models produce better model fit and lead to results more in line with urban economic theory.
The redevelopment of land containing single family detached dwellings into small attached or multiple family structures is a common method of densification in existing urban areas. The potential for redevelopment of any existing home is an important consideration for housing market participants, real estate developers and public officials. Using a longitudinal dataset from the City of Seattle, this study quantifies the impact that a number of factors — policy, physical, neighbourhood and market — have on the likelihood of this form of land use conversion. Derived with a duration model, these findings suggest that the size of the existing home, the adjacent land uses and, most importantly, factors affecting the size of the potential redevelopment have the largest impact on the probability of redevelopment.
In this article, we develop a model for explaining spatial patterns in the distribution of households across metropolitan regions in the United States. First, we use housing consumption and residential mobility theories to construct a hypothetical probability distribution function for the consumption of housing services across three phases of household life span. We then hypothesize a second probability distribution function for the offering of housing services based on the distance from city center(s) at the metropolitan scale. Intersecting the two hypothetical probability functions, we develop a phase-based model for the distribution of households in US metropolitan regions. We argue that phase one households (young adults) are more likely to reside in central city locations, whereas phase two and three households are more likely to select suburban locations, due to their respective housing consumption behaviors. We provide empirical validation of our theoretical model with the data from the 2010 US Census for 35 large metropolitan regions.
In the aftermath of the recent boom and bust of US real estate, both a refinement and a deeper under-standing of real estate valuation methods have become critical concerns across a number of broad urban-related academic fields. Out of this we see three major trends in the field of real estate valuation research: (1) the expansion of spatial econometrics; (2) the recognition of the differences between land values and improvement values; and (3) acknowledgment of value premiums stemming from more sustainable forms of development. This paper offers a brief summary of the latest work in these emerging areas of academic valuation research.
Krause, A, Throupe, R, Kilpatrick, J and Spiess, W (2012) “Contaminated Properties , Trespass , and Underground Rents.” Journal of Property Investment & Finance 30 (3): 304–320. doi:10.1108/14635781211223842.
Purpose– This paper seeks to extend the literature on property damage assessment by incorporating the right of exclusion as a compensable component to damages. The paper aims to go on to illustrate methodologies to estimate as a rent this damage component.
Design/methodology/approach– The authors develop a conceptual framework from which to examine the value of underground storage space with special reference to situations in which migrating contamination from commercial operations have invaded private real property. Specifically they view this invasion as a compensable violation of the right of exclusion. This underground storage analysis uses the three approaches common to traditional appraisal (income, sales and cost) to estimate the value of underground storage caused by migrating contamination.
Findings– Conceptually the paper finds that underground storage can be easily valued with existing appraisal methods. Using contamination scenarios paired with actual market data from the South-Eastern USA, the paper shows an example of each of the three methods for valuation. It concludes by reconciling the estimated values and supply additional issues to consider when valuing underground storage.
Most of the literature on transit corridors, such as superhighways and tunnels, focuses on the positive externality of transit access (e.g., interstate access, transit station) and fails to isolate the negative externality of the corridor itself. This empirical study examines two situations: one with both access benefits and negatives, and another without the access benefit. The findings reveal that proximity to the transit corridor alone without direct access conveys a negative impact on nearby housing values.