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Hedonic Model: The Bureau of Labor Statistics has described the hedonic model
as: "A hedonic model decomposes the price of a consumer product into implicit prices
for each of its important features and components, thereby providing an estimate of
the value for each price-influencing feature and component." When this model is
applied towards a property valuation the Hedonic model takes into consideration the
actual characteristics of a subject property and the characteristics of the sales comparables.
It then assigns a value to each characteristic as part of an overall value. Hedonic models
may look first at specific characteristics as individual components and then as a combination
of multiple heavily weighted components such as: year built, size of lot, living square footage,
number of rooms (both bed rooms and bath rooms), location and construction type.
When applying different weights to both the subject property and the weights from the comparables a Hedonic Model is able complete value estimate.
Repeat Sales Index
Through collecting changes in property value for two sales of the same dwelling at different points in time in a given geographic locale, a statistical means of estimate can be determined in the market-level of housing price changes. If an individual property has not been substantially changed since its last sale, this analysis matches each pair of sales transactions. The change is calculated from the time of the first sale to the second and so on, providing an estimate of the overall change of that geographic locale during that time period. This method generally assumes that no major physical characteristics of the subject dwelling are changed between sales.
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