FAQ about House Purchase Planner


Last Update: 2012/11/14

General

Details about House Purchase Planner


General


Who should use House Purchase Planner?


House Purchase Planner is for homebuyer who are not sure yet which house they should buy and at which location(s) they should start searching. The House Planner application will help to chose a house that fits individual house preferences (such as square footage and number of rooms). In addition House Planner will help to identify areas in Orange County that suit potential buyers requirements regarding location ammneties such as schhool quality or driving time to the next beach, major park or shopping mall.
Top

How should I use House Planner


First use the "Planner" tab and specify the house properties such as # of bedrooms or square footage. The system will estimate the house price in an average Orange County location.

Next click on "Find Location". Depending which location you choose on the map a premium is added to your house for locations better than an average location or a discount is subtracted (discounts are in () ) for locations that are inferior to the average location.

You find more information including a short video when you click the How to ... tab.

When you click on the map you cannot only see the overall premiums (discount) you can also see the amenties that come with the location (e.g., school quality, distances to beaches, parks and shopping) and by how much they contribute to the overall premium (discount).

Finally the price of a house is estimated as the price of the selected house in an average orange County location plus the overall premium for the chosen location.

If you cannot find a house locaion that is affordable you might want to adust the house criteria such as square footage, number of bedrooms etc.
Top

The map is not loading. What should I do?


In order to have dynamic maps they are generated on the fly for each individual users. This takes a little time (up to 30 seconds).
Top

Are the estiamtes up-to-date in the current market?


The econometric model behind the application includes a vavariable that reflects the sales price index for the region. This sales price index is updated in a timely fashion to account for general market changes.
Top

Can I use House Planner to appraise a house?


No. Allthough House Planner can give you a good idea how much you should expect to pay for a specific house in a given location, it cannot be precice enough for an appraiasal. Houses have many features such as views, building conditions, and other features that can only be assessed, when a professional appraisor visits the site. Ask your real estate agent for recommnedations for an appaiser.
Top

Details about House Purchase Planner


How does House Planner work?


Based on Orange Couny sales data from 2008 - 2011 house criteria as well as location criteria where identified that impact housing prices. Based on these data a hedonic regression model was developed and implemented in the House Planner application. See also the tap "Background"in the House Planner application.
Top

What is a hedonic model?


A hedonic model sees the price of an asset as the sum of all it's amenities. Here are some examples. Housebuyers are willing to pay a certain amount to live in an spacious environment reflected in number of bedrooms or square footage. In addition they prefer (and are willing to pay) for a fast access to the beach and for sending their kids to good schools. These amenties are reflected in variables such as driving distance to the beach and school quality. Many amentities that are preferred by homebuyers cannot be measured. The sum of all these variables are reflected in a constant that influences house prices.
Top

What does an API score tells me about school quality?


An API (Academic Performance Index) score measures school quality based on standard test results of the school's students. It is an annual measure of test score performance on a scale of 200 to 1,000 that indicates how well students in a school perform.
Top

Why has the neighborhood income such a big impact on price?


Although people are willing to pay extra to live in a wealthier neighborhood, this seems not to justify the large impact of neighborhood income. The reason for the large impact of income comes from amenties that for various reasons could not be considered in the model such as view, house quality, safety etc. These amenties add to house prices consequently only wealthier people can effort the houses. Thus the relation between income and house prices.
Top

I know other factors that influence housing prices why are they not considered?


When the underlying hedonic model was created many other vriables such as number of bath rooms, land square footage, distance to the next freeway, etc. were considered but found not to be statistically significant. This does not mean that these variables don't havean impact. I t just means that either the quality of data available or other statistical problems did not allow to measure their impact. However, the cummultive impact of these variables is considered in the so called constant of the model. It is just not possible to isolate their impact.
Top