characteristics of a property. Each property's atypicality is computed based on the
hedonic equation's coefficients, and the formula provided in Glower, Haurin and
Hendershott (1998)
Y exp(a + b,h,) exp(a + b,hb)
ATYP = '
*100%
(20)
The property atypicality measure, A TYP is presented as percentage of selling price
(SP); h, are the physical characteristics, h1, are the mean values of these characteristics,
and a and b, are the intercept and the slope estimates from the hedonic regression (Ibid.).
The hedonic equation used has the following form
LNPRICkE = a + ajAGE+ a2AGE2 + a3SQFT+ a4SQFT2
+ a5LANDSQFT+ a6LANDSQF72 + a7PARKING
3
+ a8FLOORS+ a9UNITS+ Z /,CONDITION + a SENIOR
i=2
+ a SUBSIDIZED+ al2CONDO (21)
Location characteristics are excluded. The fundamental value of a property is presented
by the value predicted from a hedonic price equation based on a sample of apartment
properties sold across all markets that are not associated with any conditions, completed
with out-of-state buyers, or part of an exchange.
Next, I include the atypicality measure in the model specified by the equation
LNPRICF = ao + xaEXREPL+ a2EXRELQ+ o3RELQ_REPL+ 3BUYEROUT+ a9A TYP+
P<43 r r k
+ 1,SMDUM,+ y 1k,(Xk Y) (22)
s=2 k=01=0
The estimated coefficients from this model are not different from the ones
estimated with OLS Model II. This leads us to conclude that OLS Model II is well
specified.