Modelling Property Prices with Mixture models
Property Pricing Analysis
A common application of gaussian mixture models is in property pricing. It’s used as an implementation of a “Hedonic Pricing” which involves modelling the price using variables categorised into 3 types; structural (intrinsic properties of the property), locality (region, state etc.) and environmental (air quality, proximity to parks etc.) the latter 2 types genrally have noise in their measurement - so are modelled as ‘random effects’. it’s this that makes a mixture model needed, where conventional multiple regression would only have errors as randomly distributed, and predictors fixed