Abstract:Methods for the estimation of depreciation within the cost approach to appraisal of single-family residential property have been the focus of very few empirical studies. The purpose of this study is to generate empirical evidence related to one such method, specifically the age-life method. Within the context of a hedonic price model, functional form of the model and the design of the age variable are chosen so that we can test for alternative paths of depreciation with just one model. The alternative paths ca… Show more
“…The rate of depreciation slows once a building has reached the age of a K . Cannaday and Sunderman (1986) were the first to use (A11) for detached houses, but they did not consider the possibility of a slowing depreciation for very old buildings. This is reasonable given the oldest house in their data set was just 26 years.…”
“…The rate of depreciation slows once a building has reached the age of a K . Cannaday and Sunderman (1986) were the first to use (A11) for detached houses, but they did not consider the possibility of a slowing depreciation for very old buildings. This is reasonable given the oldest house in their data set was just 26 years.…”
“…A similar relationship is expected to exist between structure value and its age; that is, the property depreciation. This relationship has been documented at least in Cannaday and Sunderman (1986) and Wolverton (1998). In addition, a variable of ownership type is especially included to account for the price premium of sites in a single ownership over those in joint ownership.…”
Section: Model Building and Results Interpretationmentioning
“…It is expected that property age has a positive impact on income capitalization rate. The empirical results by Geltner and Fisher (2007); Smith (2004); Malpezzi et al (1987) and Cannaday and Sunderman (1986) show depreciation may present nonlinear change with an increase in property age. The age of a property and its income capitalization rate may have a nonlinear relationship, and thus the age square of property is added.…”
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