Measurement error in residential property valuation: An application of forecast combination

Glennon, Dennis; Kiefer, Hua; Mayock, Tom

doi:10.1016/j.jhe.2018.02.002

Cited by 27 publications

(12 citation statements)

References 70 publications

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“…Hence, this study combines the analysis of the heterogeneity in preferences within a tract with a difference-in-difference (DiD) model in an hedonic framework. The literature underscores the need to improve current and to develop novel methods to improve our ability to estimate the marginal WTP for environmental improvements with market data (Bento, 2013;Guignet et al, 2018) and the need to better understanding belief formation around local amenities (Currie et al, 2015;Glennon et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Environmental risk and differentiated housing values: Evidence from the north of France

Lavaine

2019

Journal of Housing Economics

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Section: Introductionmentioning

confidence: 99%

Environmental risk and differentiated housing values: Evidence from the north of France

Lavaine

2019

Journal of Housing Economics

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“…The first type is that the model itself adopts hybrid thinking. Glennon et al (2018) consider five different forecast combination methods to construct a weighted average of component forecasts [104]. Guo et al (2014) integrate some elements from a sales comparison approach and income approach into the cost approach to improve the accuracy of the valuation of real estate [105].…”

Section: Mix-based Modelmentioning

confidence: 99%

Mass Appraisal Models of Real Estate in the 21st Century: A Systematic Literature Review

Wang

2019

Sustainability

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With the increasing volume and active transaction of real estate properties, mass appraisal has been widely adopted in many countries for different purposes, including assessment of property tax. In this paper, 104 papers are selected for the systematic literature review of mass appraisal models and methods from 2000 to 2018. The review focuses on the application trend and classification of mass appraisal and highlights a 3I-trend, namely AI-Based model, GIS-Based model and MIX-Based model. The characteristics of different mass appraisal models are analyzed and compared. Finally, the future trend of mass appraisal based on model perspective is defined as “mass appraisal 2.0”: mass appraisal is the appraisal procedure of model establishment, analysis and test of group of properties as of a given date, combined with artificial intelligence, geo-information systems, and mixed methods, to better model the real estate value of non-spatial and spatial data.

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“…The majority of valuation accuracy studies have focussed on the commercial property sector for investment purposes, given its significant impacts on investment portfolio management, property performance and acquisition or disposal decision-making processes (Baum et al, 2001;Kallio et al, 2012;Adegoke, 2016). In recent years, there is an increasing focus on the residential sector, for bank lending and lowering financial risk (McGreal and Taltavull, 2012;Hu et al, 2016;Glennon et al, 2018). The industrial market in terms of high-tech development zones, logistics and warehouse sectors, however, has witnessed limited research on valuation accuracy.…”

Section: Introductionmentioning

confidence: 99%

Development land valuation accuracy in China – a case study of Beijing

Dou¹,

Hemphill²,

Lim³

2020

JPIF

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PurposeThe paper aims to quantitatively investigate vacant industrial land valuation accuracy in China, given the importance of the industrial market as an underlying pillar to promote urban growth especially in emerging economies.Design/methodology/approachIn China, the government formulates a Land Benchmark Price (LBP) to serve as a price reference point to sell land rights. To gain an in-depth understanding of the valuation practice by LBP, this paper uses correlation analysis to investigate the varying dynamics between the transaction-based prices and LBP appraisal-based estimates. Furthermore, a margin of error examination investigates the distortion in LBP land appraisals, with an amended LBP presented to improve the accuracy of the current LBP method.FindingsDifferent influencing factors are identified to impact the actual market transaction prices and the LBP construction, leading to a large discrepancy in industrial land appraisals. A systematic problem is recognised that the construction of the LBP follows urban bid curve theory, whereas the land transaction prices do not, demonstrating that an urgent LBP update is needed to capture the market dynamics for industrial market.Practical implicationsThe paper sets out discrepancies in valuation accuracy surrounding the application of the LBP valuation approach in China. This has practical implications for valuers in terms of raising their awareness of the deficiencies in the approach and the pitfalls they need to guard against in their appraisals. It also has implications for developers and investors who rely on valuer appraisals to assess the viability of land purchases; hence, they need to express caution in the appraisal advice sought. Finally, the results demonstrate to the standard setters how they need to modify the LBP equations to better capture market dynamics.Originality/valueThe paper examines valuation accuracy in transitional economies, through valuation differentials between appraised price and the transacted price. The value of the work lies in the analysis of the fundamental differentials between market price and appraised value, which is of importance to investors/developers, practicing valuers, as well as government officials responsible for setting the valuation standards.

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Measurement error in residential property valuation: An application of forecast combination

Cited by 27 publications

References 70 publications

Environmental risk and differentiated housing values: Evidence from the north of France

Environmental risk and differentiated housing values: Evidence from the north of France

Mass Appraisal Models of Real Estate in the 21st Century: A Systematic Literature Review

Development land valuation accuracy in China – a case study of Beijing

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