Updated NAHB Research: House Price Estimator

Economist Paul Emrath of NAHB has updated a model he developed that estimates the value various features add to a home. The updated research paper and estimating tool enables builders, developers, prospective home buyers and home owners to see the impact that various physical features and neighborhood characteristics might have on the price of a home.

Looking at location factors, the updated NAHB tool finds a general tendency for house prices to be higher in the Northeast and West, as well as in central cities and suburbs. Meanwhile, prices tend to be lowest for homes built outside of a metro area, though some regional variation exists regardless of urban status.

The standard new single-family detached home is defined by these features (based primarily on averages or medians from the Census Bureau’s Survey of Construction):

  • 2,150 square feet of living space
  • Two full bathrooms and one half bath
  • Three bedrooms
  • Construction on a slab foundation
  • A garage
  • Central air conditioning
  • A fireplace
  • A separate dining room,
  • Three miscellaneous rooms
  • Satisfactory shopping (grocery or drug stores) within 15 minutes of the community or neighborhood

The price estimator, which can be accessed on computers with Microsoft Excel, can be useful in a variety of settings. For example, home builders might use the estimator to help determine if the cost of providing a particular amenity will be valued by consumers, while households considering purchasing a new home can use it to get a rough idea of likely price differences for different sizes and amenity packages. Existing home owners can use it to get an idea of how much it would cost to trade up to a home that is newer, larger or more stocked with amenities, while remodelers can use it to show how much particular renovations would add to the value of a home. Finally, developers can use the estimator to help price neighborhood characteristics such as waterfront space, which can help them evaluate the desirability of potential building sites.

Among other important findings, the estimator reveals that the greatest impact on a home’s value comes from adding a third full bathroom, which boosts the estimated price of a standard new home built in a Southern suburb by about $43,000. Meanwhile, eliminating the fireplace reduces the estimated price by about $24,000.

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8 Responses to Updated NAHB Research: House Price Estimator

  1. Appraiser D says:

    Does the wife really want to clean three bathrooms? Pay a premium for additional work? Finished walk out basement used as living area or unfinished used as utility room?

  2. [...] October, Eye on Housing profiled updated NAHB research that estimates the value various features add to a home. The updated research paper and estimating tool enables builders, developers, prospective home [...]

  3. [...] October, NAHB released an updated version of the statistical model it maintains for estimating the average price of a single-f…. Economist Paul Emrath has now published a companion model designed to estimate average gross rent [...]

  4. Larry says:

    If 21/2 baths are norm…why would a 3rd not be considered a super- adequacy?

    • 3 full bathrooms in a 4,000 sq.ft home or 3 full bathrooms in a 1200 sq.ft home. It’s not just a single parameter that sets in play the functional obsolescence due to superadequacy.

      • Larry says:

        I’m curious…has this ever been used by a city tax assessing departkment anywhere yet? could it be?

      • Robert Dietz says:

        Larry —

        Paul Emrath’s effort is a statistical model based on Census regions. As such, it is useful to describe trends on an aggregate level, and give a sense of scale for various features and amenities, but it would not be appropriate to use for city tax assessmenets.

  5. Ive lived in several homes with 3 or more bathrooms. The last house we had I would constantly run past it to the other bathroom because it never registered [in my head] that it was there. 3 bathrooms for a small family is a waste of money, unless of course you are blessed with alot of daughters…

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