An Evaluation of the Effects of the Housing Bubble on Consumer Preferences in the Housing Market: A Hedonic Pricing Model

Abstract

The purpose of this thesis is to examine the effects of the recent housing bubble on consumer preferences across the entire United States along with individual census regions. A hedonic pricing model is used to analyze how consumers valued certain aspects of a house then regressions are run on the model to test a theory developed to explain potential changes in consumer preferences in the housing market. Using data from 1997 and 2005, the results of the tests are examined to see how, if at all, consumers’ preferences changed during the housing bubble and if these changes were universal across the whole United States or contained in specific regions. The regression results are then compared and any significant changes and variables are discussed and explored.