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Modeling House Pricing in the Real Estate Market of São Paulo City

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Author(s): Denisard Cneio de Oliveira Alves | Joe Akira Yoshino | Paula Carvalho Pereda | Carla Jucá Amrein

Journal: Revista Brasileira de Finanças
ISSN 1679-0731

Volume: 9;
Issue: 2;
Start page: 167;
Date: 2011;
Original page

Keywords: Pricing Real Estate in São Paulo - Brazil | Hedonic Model Applied for Asset Pricing | Pricing Rights to Built-Home

ABSTRACT
edonic modeling has become a benchmark for pricing real assets with several intrinsic characteristics. This work tests also others dimensions for asset pricing: the quality of life in the housing neighborhood and macroeconomic variables. The data is about the real estate market in São Paulo city from January 2001 to March 2008. The main results were: the longer the maturity of mortgage financing, the larger the housing price, but decreasing interest rate spread stimulate the real estate market, and the interactions between the dummy for the boom period and either housing characteristics or bank interest rates spread show that the hedonic model loses its relative importance for pricing, while market risk variables become much more relevant. Thus, these new findings suggests that for modeling a house price index it is not sufficient to consider only average prices or a hedonic approach, but both the market and credit risks as well.
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