IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v8y2019i2p99.html
   My bibliography  Save this article

Considerations for a Regression-Based Real Estate Valuation and Appraisal Model: A Pilot Study

Author

Listed:
  • Shawn L. Robey
  • Mark A McKnight
  • Misty R. Price
  • Rachel N. Coleman

Abstract

This paper advocates a more scientific approach to residential real estate valuation as opposed to more traditional approaches, which are flawed for two main reasons- (1) appraiser judgements are almost exclusively used and (2) appraisers’ sample sizes are too small to provide adequate estimated values. By using a regression model, this paper explores the impacts of different characteristics on market value. Three hundred and fifteen properties in Evansville, Indiana, were analyzed testing twelve different variables. This model suggests that 91.8% of the total market value variation is explained by four independent variables. These findings provide evidence that multiple linear regression could be used to better predict a property’s value.

Suggested Citation

  • Shawn L. Robey & Mark A McKnight & Misty R. Price & Rachel N. Coleman, 2019. "Considerations for a Regression-Based Real Estate Valuation and Appraisal Model: A Pilot Study," Accounting and Finance Research, Sciedu Press, vol. 8(2), pages 1-99, May.
  • Handle: RePEc:jfr:afr111:v:8:y:2019:i:2:p:99
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/14978/9485
    Download Restriction: no

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/14978
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Guo, Zi-Yi, 2017. "Housing Dynamics, Empirical Facts and the Business Cycle," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(2), pages 46-53.
    2. Zheng Liu & Pengfei Wang & Tao Zha, 2013. "Land‐Price Dynamics and Macroeconomic Fluctuations," Econometrica, Econometric Society, vol. 81(3), pages 1147-1184, May.
    3. Nghiep Nguyen & Al Cripps, 2001. "Predicting Housing Value: A Comparison of Multiple Regression Analysis and Artificial Neural Networks," Journal of Real Estate Research, American Real Estate Society, vol. 22(3), pages 313-336.
    4. Halbert C. Smith, 1986. "Inconsistencies in Appraisal Theory and Practice," Journal of Real Estate Research, American Real Estate Society, vol. 1(1), pages 1-17.
    5. Narula, Subhash C. & Wellington, John F. & Lewis, Stephen A., 2012. "Valuating residential real estate using parametric programming," European Journal of Operational Research, Elsevier, vol. 217(1), pages 120-128.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pei Kuang, 2013. "Imperfect Knowledge About Asset Prices and Credit Cycles," Discussion Papers 13-02, Department of Economics, University of Birmingham.
    2. Alessandri, Piergiorgio & Mumtaz, Haroon, 2019. "Financial regimes and uncertainty shocks," Journal of Monetary Economics, Elsevier, vol. 101(C), pages 31-46.
    3. Kitova, Olga & Dyakonova, Ludmila & Savinova, Victoria, 2020. "Prediction of Socio-Economic Indicators of the Megapolis Development on the Basis of the Intellectual Forecasting Information System “SHM Horizon”," MPRA Paper 104234, University Library of Munich, Germany, revised 19 Nov 2020.
    4. Chica-Olmo, Jorge & Cano-Guervos, Rafael, 2020. "Does my house have a premium or discount in relation to my neighbors? A regression-kriging approach," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    5. Francesco Furlanetto & Francesco Ravazzolo & Samad Sarferaz, 2019. "Identification of Financial Factors in Economic Fluctuations," The Economic Journal, Royal Economic Society, vol. 129(617), pages 311-337.
    6. Eleni Iliopulos & François Langot & Thepthida Sopraseuth, 2019. "Welfare Cost of Fluctuations When Labor Market Search Interacts with Financial Frictions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(8), pages 2207-2237, December.
    7. Lindé, Jesper & Smets, Frank & Wouters, Rafael, 2016. "Challenges for Central Banks´ Macro Models," Working Paper Series 323, Sveriges Riksbank (Central Bank of Sweden).
    8. Nyakabawo, Wendy & Miller, Stephen M. & Balcilar, Mehmet & Das, Sonali & Gupta, Rangan, 2015. "Temporal causality between house prices and output in the US: A bootstrap rolling-window approach," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 55-73.
    9. Katharina Knoll & Moritz Schularick & Thomas Steger, 2017. "No Price Like Home: Global House Prices, 1870-2012," American Economic Review, American Economic Association, vol. 107(2), pages 331-353, February.
    10. Ran, Gao & Zixiang, Zhu & Jianhao, Lin, 2022. "Consumption–investment comovement and the dynamic impact of monetary policy uncertainty in China," Economic Modelling, Elsevier, vol. 113(C).
    11. Kydland, Finn & Rupert, Peter & Sustek, Roman, 2012. "Housing Dynamics over the Business Cycle," University of California at Santa Barbara, Economics Working Paper Series qt7bn5k73m, Department of Economics, UC Santa Barbara.
    12. Hideaki Hirata & M. Ayhan Kose & Christopher Otrok & Marco E Terrones, 2013. "Global House Price Fluctuations: Synchronization and Determinants," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 119-166.
    13. Guo, Zi-Yi, 2017. "Information heterogeneity, housing dynamics and the business cycle," EconStor Preprints 168561, ZBW - Leibniz Information Centre for Economics.
    14. Ding, Haoyuan & Ni, Bei & Xue, Chang & Zhang, Xiaoyu, 2022. "Land holdings and outward foreign direct investment: Evidence from China," Journal of International Money and Finance, Elsevier, vol. 124(C).
    15. Marcus Moelbak Ingholt, 2017. "House Prices, Geographical Mobility, and Unemployment," Discussion Papers 17-06, University of Copenhagen. Department of Economics.
    16. Villacorta, Alonso, 2018. "Business cycles and the balance sheets of the financial and non-financial sectors," ESRB Working Paper Series 68, European Systemic Risk Board.
    17. Pedro Gete, 2015. "Housing demands, savings gluts and current account dynamics," Globalization Institute Working Papers 221, Federal Reserve Bank of Dallas.
    18. Maurizio d’Amato, 2007. "Comparing Rough Set Theory with Multiple Regression Analysis as Automated Valuation Methodologies," International Real Estate Review, Global Social Science Institute, vol. 10(2), pages 42-65.
    19. J. Scott Davis & Kevin X. D. Huang & Ayse Sapci, 2020. "Imperfect substitution in real estate markets and the effect of housing demand on corporate investment," Vanderbilt University Department of Economics Working Papers 20-00002, Vanderbilt University Department of Economics.
    20. Devereux, Michael B. & Young, Eric R. & Yu, Changhua, 2019. "Capital controls and monetary policy in sudden-stop economies," Journal of Monetary Economics, Elsevier, vol. 103(C), pages 52-74.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:afr111:v:8:y:2019:i:2:p:99. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.