On the Stability of the Implicit Prices of Housing Attributes: A Dynamic Theory and Some Evidence
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Charles Ka Yui Leung, Kelvin Siu Kei Wong and Patrick Wai Yin Cheung
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International Real Estate Review
Given the dramatic fluctuations in aggregate housing prices, this paper attempts to examine whether the implicit prices of different housing attributes are ?stable.? Theoretically, this paper provides perhaps the first dynamic, general equilibrium model in which housing attributes? implicit prices fluctuate. Empirically, this paper models the time paths of different implicit prices as auto-regressive processes by employing a hedonic pricing model on a large set of housing transaction data over a relatively long period of time. An endogenous structural break test is then performed. Except for a few attributes, structural breaks are not detected. Directions for future research are discussed.