What’s an extra bath worth? Builders introduce estimator

Want to know what an additional bathroom is worth in Seattle?

The National Association of Home Builders has developed a house price estimator in an attempt to gauge the average price of a home with various features in different parts of the country.

By changing the age, features, location and other inputs, the model can be used to estimate how a particular amenity – for example, an extra bathroom or waterfront location – tends to impact the price of a single-family detached home.

The model was developed by applying well-established statistical techniques to data from the American Housing Survey (conducted by the U.S. Census Bureau and the Department of Housing and Urban Development). The American Housing Survey contains considerable information about the units and the neighborhoods in which they’re located.

The amount of geographic detail in the survey is somewhat limited, however, so the output of the price estimator is an average price for a standardized home (that is, one with a given set of features) across a broad Census region, not the price of a particular home in a specific neighborhood.

Also, no survey or statistical model can possibly capture all features that potentially affect house prices. Hence, there’s always a chance that a particular feature in the model is acting partly as a proxy for others. If homes with fireplaces tend to have higher quality decorative hardwood trim (a feature not available in the data), for instance, the estimated impact of a fireplace could be picking up part of the effect of the hardwood trim, as well as the value of the fireplace itself.