An Empirical Study of Sample Selection Bias in Indices of Commercial Real Estate

Real estate price indices based solely on samples of sold properties may not accurately represent the population of properties due to potential sample selection bias. This study addresses this potential for sample selection bias in the construction of commercial price indices within the context of the Phoenix area office market. The empirical analysis confirms the presence of sample selection bias in the estimation of the total price equation. However, within this sample, the price indices generated after correcting for sample selection bias do not appear significantly different from those that do not consider selectivity bias