Working together with a class of undergraduate students at Chapman University in Orange, California, economist and professor Jim Doti, Ph.D. developed a statistical model to rank 39 counties in California according to “most undervalued” and “most overvalued.”
Nicknamed “the Amenities Factor,” the model takes into account such statistics as the county’s median income level, the average price of a home, adjacency to the Pacific Ocean, and the climate index. The higher the income level in the county and the nearer to the Pacific Ocean, the more valuable the real estate is.
“I am a transplant from Chicago,” said Doti, “and I have believed for 40 years that there is more value to a home in California than just the price. The Amenities Factor explains why. We hear that the secret to real estate is ‘location, location, location,’ and the Amenities Factor proves the adage.”
An econometrician and the founder of Chapman University’s annual Economic Forecast, now in its 40th year, Doti took the lead on creating the Amenities Factor as a class project for his undergraduate Statistics course at Chapman University in Orange. The students reviewed the data and crunched the numbers. Some surprises resulted.
Applying the Amenities Factor model, for example, Riverside County is more “overvalued” than both Orange and Los Angeles Counties. Kern and Sacramento County are right in the middle, neither highly over- or under-valued. Meanwhile, Placer County is the most “undervalued” county in California and Santa Clara is the most “overvalued.” (A full list of the counties in order of value is attached.)
