Hedonic price and depreciation indexes for residential housing: A comment

A regression technique for developing residential real estate price indexes using repeat sales on properties has not allowed the separation of depreciation from true price changes. In a recent article Chinloy 2] has proposed a method for achieving this separation. This note shows that his theoretical derivation is incorrect. A corrected model is then used to show the stringent assumptions that are necessary to interpret his empirical results as measuring embodied technological change. The true price effects and the depreciation effects still cannot be separated in such a model.