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International Journal of Management and Sustainability

December 2012, Volume 1, 2, pp 31-44

The Impact of Neighborhood Characteristics on Housing Prices-An Application of Hierarchical Linear Modeling

Lee Chun Chang

,

Hui-Yu Lin

Lee Chun Chang 1
Hui-Yu Lin 2

  1. Department of Real Estate Management, National Pingtung Institute of Commerce, Taiwan 1

  2. National Pingtung Institute of Commerce, Department of Real Estate Management, Taiwan 2

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Abstract:

Housing data are of a nested nature as houses are nested in a village, a town, or a county. This study thus applies HLM (hierarchical linear modelling) in an empirical study by adding neighborhood characteristic variables into the model for consideration. Using the housing data of 31 neighborhoods in the Taipei area as analysis samples and three HLM sub-models, this study discusses the impact of neighborhood characteristics on house prices. The empirical results indicate that the impact of various neighborhood characteristics on average housing prices is different and that the impact of house characteristics on house prices is also moderated by neighborhood characteristics.

Contribution/ Originality

Keywords:

Neighborhood characteristics, house prices, hierarchical linear modelling (HLM), random effect, moderate effect.

Reference:

  1. Brown, K.H. and B. Uyar, 2004. A hierarchical linear model approach for assessing the effects of house and neighborhood characteristics on housing prices. Journal of Real Estate Practice and Education, 7(1): 15-24.
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  3. Cohen, J., 1988. Statistical power analysis for the behavioral sciences. Lawrence Erlbaum Associates.
  4. Hofmann, D.A., 1997. An overview of the logic and rationale of hierarchical linear models. Journal of Management 23(6): 723-744.
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  10. Lin, S.J., 2004. The marginal willingness-to-pay of star public elementary and junior high school districts in taipei city. Journal of Housing Studies 13(15-34).
  11. Ma, Y.C. and C.C. Lin, 2007. An application of mass appraisal and the hedonic equation in the real estate market in taiwan. Journal of Housing Studies 16(2): 1-22.
  12. Martins-Filho, C. and O. Bin, 2005. Estimation of hedonic prices functions via additive nonparametric regression. Empirical Economics 30(1): 93-114.
  13. Quigley, J.M., 1985. Consumer choice of dwelling, neighborhood and public services. Regional Science and Urban Economics 15(1): 41-63.
  14. Raudenbush, S.W. and A.S. Bryk, 2002. Hierarchical linear models: Applications and data analysis methods. Newbury Park: Sage Publications.
  15. Rosen, S., 1974. Hedonic prices and implicit markets: Product differentiation in pure competition. Journal of Political Economy 82(1): 34-55.
  16. Uyar, B. and K.H. Brown, 2007. Neighborhood affluence, school-achievement scores and housing prices: Cross-classified hierarchies and hlm. Journal of Housing Research 16(2): 97-116.

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