Regression Analysis of Apartment Prices
This is from the New York Times. Someone has written a paper on co-op/condo prices in Manhattan where the price components are broken down using regression analysis.
So, you get results along the lines of: a doorman adds on average 11.8% to the price, an extra bathroom is 15.5%, an extra bedroom is 18.5%, etc. Square footage was obviously the largest contributor to price, with every 1% difference in square footage adding 0.53% to the price of a co-op.
By this calculation, the combined apartment should be just around double in value compared to the current apartment. Recent major renovations add an average of 8.67%. So, from this point of view, it’s a bit of a wash.
Interestingly, real estate listings indicate that 2-BR/2-BA in this neighborhood should go for more, something like at least 15% or so.
It should be noted that we still don’t have anything like Black-Sholes for real estate units.