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A Note on the Bias in House Price Capitalization Models
Author(s) -
Clauretie Terrence M.
Publication year - 1983
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00305
Subject(s) - capitalization , economics , sample (material) , house price , capitalization rate , econometrics , process (computing) , financial economics , microeconomics , finance , computer science , thermodynamics , real estate , philosophy , linguistics , physics , real estate investment trust , operating system
Recent research efforts concerning the capitalization of low‐rate, seller‐supplied financing have employed hedonic pricing models that may produce biased estimates of the capitalization process. The bias results when properties sold with owner financing are included in the researcher's sample. This note discusses the nature of the bias and suggests a possible solution.