Computer Vision and Real Estate: Do Looks Matter and Do Incentives Determine Looks

36 Pages Posted: 22 Oct 2018 Last revised: 15 Apr 2023

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Michael Scott Kincaid

Harvard University

Nikhil Naik

Massachusetts Institute of Technology (MIT)

Date Written: October 2018

Abstract

How much does the appearance of a house, or its neighbors, impact its price? Do events that impact the incentives facing homeowners, like foreclosure, impact the maintenance and appearance of a home? Using computer vision techniques, we find that a one standard deviation improvement in the appearance of a home in Boston is associated with a .16 log point increase in the home’s value, or about $68,000 at the sample mean. The additional predictive power created by images is small relative to location and basic home variables, but external images do outperform variables collected by in-person home assessors. A home’s value increases by .4 log points, when its neighbor’s visually predicted value increases by one log point, and more visible neighbors have a larger price impact than less visible neighbors. Homes that went through foreclosure during the 2008-09 financial crisis experienced a .04 log point decline in their appearance-related value, relative to comparable homes, suggesting that foreclosures reduced the incentives to maintain the housing stock. We do not find more depreciation of appearance in rental properties, or more upgrading of appearance by owners before resale.

Suggested Citation

Glaeser, Edward L. and Kincaid, Michael Scott and Naik, Nikhil, Computer Vision and Real Estate: Do Looks Matter and Do Incentives Determine Looks (October 2018). NBER Working Paper No. w25174, Available at SSRN: https://ssrn.com/abstract=3270754

Edward L. Glaeser (Contact Author)

Harvard University - Department of Economics ( email )

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Michael Scott Kincaid

Harvard University

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Nikhil Naik

Massachusetts Institute of Technology (MIT) ( email )

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