Studies in Hedonic Resale Housing Price Indexes∗

Hedonic analysis is gaining acceptance as a tool for quality adjustment in goods and services in official statistics and academic research. Computers and houses are by far the two most popular products for which much of the hedonic research been concentrated on. Few comparative studies have, however, looked at the sensitivity of the price indexes that are obtained when different regression approaches (e.g., pooled regression, adjacent period regression, and separate regression) are applied to the data. This paper attempts to provide answers as to the sensitivity of the hedonic results to the regression approach used. Furthermore, the paper explores how functional forms affect results. The data used are prices for resale houses in the Ottawa area from the Multiple Listing Service (MLS) for the period 1996 to 2005. Characteristics of the database include a large number of explanatory variables and observations.