Spatial characteristic with individual house properties and multilevel approach to hedonic models

The purpose of this research is to examine a multilevel approach to property hedonic models. Because individual properties are nested within neighborhoods within a city, a multilevel method is used to develop hedonic models. The author analyses several statistical and substantive reasons for explicitly modeling individual properties as belonging to neighborhoods. The reasons include spatial dependencies, non-stationarity and spatial heterogeneity. The conclusion is that multilevel models are not the only means of addressing issues of spatial dependencies and non-stationarity. The advantage of using a multilevel approach for property hedonic models is that they can analyze variables from different scales simultaneously, while also accounting for issues of spatial dependencies and non-stationarity.