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The Influence of Reference Group House Size on House Price

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  • Susane Leguizamon
Abstract
This article examines the effect of a change in housing consumption of various reference groups on predicted own house price. I employ a spatial autoregressive model and find that an increase in average house size of the eight nearest neighbors and the largest houses in the district has a negative effect on predicted house price, whereas the effect of an increase in average house size of the further neighbors (9th through 16th neighbors) and the smallest houses in the district on predicted house price is positive. This suggests that the “envy effect” dominates with respect to the nearest and largest neighbors, whereas the “basking in the reflected glory” effect dominates with respect to the further smallest neighbors.

Suggested Citation

  • Susane Leguizamon, 2010. "The Influence of Reference Group House Size on House Price," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(3), pages 507-527, September.
    • Handle: RePEc:bla:reesec:v:38:y:2010:i:3:p:507-527
    DOI: 10.1111/j.1540-6229.2010.00275.x
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    3. Lee Whieldon & Huthaifa Ashqar, 2020. "Predicting Residential Property Value in Catonsville, Maryland: A Comparison of Multiple Regression Techniques," Papers 2101.01531, arXiv.org.
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    5. Anupam Nanda & Jia-Huey Yeh, 2016. "Reflected Glory Versus Repulsive Envy: How Do the Smiths Feel About the House of the Joneses?," Asian Economic Journal, East Asian Economic Association, vol. 30(3), pages 317-341, September.
    6. Sebastain Awondo & Harris Hollans & Lawrence Powell & Chip Wade, 2023. "Estimating the effects of wind loss mitigation on home value," Southern Economic Journal, John Wiley & Sons, vol. 90(1), pages 71-89, July.
    7. Zahirovich-Herbert, Velma & Gibler, Karen M., 2014. "The effect of new residential construction on housing prices," Journal of Housing Economics, Elsevier, vol. 26(C), pages 1-18.
    8. Susane Leguizamon, 2016. "Who cares about relative status? A quantile approach to consumption of relative house size," Applied Economics Letters, Taylor & Francis Journals, vol. 23(5), pages 307-312, March.
    9. Joshua C. Hall & Donald J. Lacombe & Amir Neto & James Young, 2022. "Bayesian Estimation of the Hierarchical SLX Model with an Application to Housing Markets," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(2), pages 360-373, April.
    10. Velma Zahirovic-Herbert & Karen Gibler, 2014. "Historic District Influence on House Prices and Marketing Duration," The Journal of Real Estate Finance and Economics, Springer, vol. 48(1), pages 112-131, January.
    11. Liao, Wen-Chi & Jing, Kecen & Lee, Chaun Ying Rachel, 2022. "Economic return of architecture awards: Testing homebuyers’ motives for paying more," Regional Science and Urban Economics, Elsevier, vol. 93(C).

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