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11/01/88
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11/01/88
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Meetings
Meeting Document Type
Agenda
Document Title
Planning & Zoning Commission
Document Date
11/01/1988
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The method used to determine the actual relationship between variables <br />and ~rice is called regression analysis. Multiple regression analysis is <br />used' to sort a large number of possible variables into an order according <br />to statistical significance and importance. In this research, multiple <br />regression analysis was performed to sort the relationships between 15 <br />housing variables and sale price for 1812 homes within five miles of <br />three landfill sites {Anoka Regional Sanitary Landfill in Ramsey, Waste <br />Disposal Engineering in Andover and Oak Grove Landfill in Oak Grove} <br />in Anoka County. Each landfill was considered separately. <br /> <br />One can readily imagine a situation in which several housing variables <br />could be found to influence significantly the sale price of a house. If <br />one wished to know the marginal difference in price that could be <br />attributed to each significant variable, one must calculate the Beta weight <br />for each variable. <br /> <br />The Beta weight is expressed as (B=$x) and shows the dollar value <br />added or subtracted from price by a unit change (+/- 1) in a significant <br />variable. For example, let us assume that the number of square feet in <br />a house had a significant affect on the final price. Beta weights will <br />tell us the change in price that is achieved if one changes the number <br />of sqc~are feet. In this example, let us2further assume the Beta weight <br />for, ft is 20. If one house has 100 ft more than an otherwise simila~ <br />house, ~, should be worth $2000 more. The calculation is simply $20/ft' <br />x 100 ft~ = $2,000. <br /> <br />The purpose of analytical methods like the Model of Hedonic Value is to <br />isolate characteristics (variables) which can serve as reliable indicators <br />of some phenomenon (in this case, price of a house). It is assumed <br />that significant variables account for differences in price. It is further <br />assumed that marginal differences in price can be attributed to degrees <br />of change in significant variables. <br /> <br />Many variables used in previous Hedonic model studies have been used <br />to test differences in housing prices in a variety of geographic locations. <br />Sometimes, however, researchers add variables to the conventional model <br />which they feel may be important when they wish to measure the impact <br />of certain forces on value -- like the building of a landfill, for example. <br />Once researcherd habr assembled a list of possible variables to measure <br />and has considered the significance of these variables in determining <br />variations in housing price, they will want to know if the variables he <br />has cl~osen are the right ones. The statistical test for this is expressed <br />as (R-). <br /> <br />The R2 value shows the percent of variance in price which can be <br />explained by all the independent variables in the model, taken together. <br />In a reliable Hedonic Model, one would want to know that the variables <br />one has selected to study, lumped together, could explain as much of <br /> <br /> <br />
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