What type of model uses factors like size and location to explain real estate prices?

The correct answer is hedonic regression, as this model is specifically designed to analyze the impact of various factors on the pricing of goods, including real estate. Hedonic regression breaks down the attributes of a property, such as size, location, number of bedrooms and bathrooms, age of the property, and other characteristics, and assesses how each contributes to the overall market price. By quantifying these factors, the model helps to isolate the effect of specific features on property values and allows for a more precise understanding of pricing dynamics in the real estate market.

Linear regression is a more general statistical analysis technique that can be applied in multiple contexts, including real estate, but it does not specifically focus on the attributes of properties as hedonic regression does. It simply establishes a linear relationship between independent and dependent variables without necessarily accounting for the unique characteristics of real estate assets.

Discounted cash flow analysis is a valuation method primarily used for estimating the value of an investment based on its expected future cash flows. While important in real estate finance, it does not directly analyze the factors that drive property prices from a market characteristics standpoint.

Comparative sales analysis involves assessing the prices of similar properties to estimate the value of a subject property, but it does not employ a modeling approach like hed