Hi everyone,<\/p>\n
I\u2019m currently working on my master\u2019s thesis, where I\u2019m exploring housing affordability<\/strong> through a spatial hedonic model<\/strong>. My data includes cross-sectional property transactions for three towns, but I\u2019m trying to push the boundaries by incorporating mortgage payments<\/strong>, interest rates<\/strong>, and even inflation<\/strong> into the model\u2014something that\u2019s not typically done with this kind of analysis.<\/p>\n The goal is to capture more than just property price determinants; I want to reflect how financing conditions<\/strong> (e.g., mortgage rates) impact housing affordability spatially. However, since I\u2019m limited to cross-sectional data, I\u2019m trying to think creatively about how to do this while staying within the bounds of spatial econometric methods.<\/p>\n Here\u2019s what I\u2019ve been considering:<\/p>\n Mortgage Payments<\/strong>: Calculating the monthly payments based on property values and prevailing mortgage rates and using these as an alternative measure of affordability in the hedonic model. Interest Rates<\/strong>: Exploring whether I can create interaction terms to see how amenities (e.g., proximity to urban centers or parks) are valued differently under varying interest rate conditions. Inflation<\/strong>: I\u2019m wondering if adjusting housing prices or mortgage payments for inflation would be valuable, or if there\u2019s a better way to represent the impact of inflation on affordability. <\/p>\n Question for the community<\/strong>: How would you approach incorporating mortgage payments, interest rates, and inflation into a spatial hedonic model<\/strong> given the limitation of cross-sectional data? Any creative methods or existing papers you can point me to?<\/p>\n I\u2019d love to hear from anyone who\u2019s tackled a similar problem or just has ideas on how to make this work. Thanks in advance for your input\u2014let\u2019s push the field of housing affordability research forward together!<\/p>\n TL;DR:<\/strong> Working on housing affordability with a spatial hedonic model using cross-sectional data. Need ideas on how to creatively incorporate mortgage payments, interest rates, and inflation into the model. Thoughts?<\/p>\n<\/div>\n submitted by \/u\/meangrnfreakmachine <\/a>
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