Multilevel Methodology Approach for the Construction of Real Estate Monthly Index Numbers
AbstractIn this paper, we evaluate price indices and hedonic price indices for Italian real estate data using multilevel models. The methodology is based on a random coefficient panel data model. We propose a Laspeyres-type price index and hedonic prices indexes based on some characteristics of the sold properties. The multilevel hierarchical analysis has the advantage of allowing the appraisal analysis for groups, and identified in the same sample data the hierarchical structures of market segmentation according to the parameters of the real estate segment. It allows getting a lot of regression functions as the number of groups identified. Obviously, this depends on the sample size and the…
An Estimative Model of Automated Valuation Method in Italy
The Automated Valuation Method (AVM) is a computer software program that analyzes data using an automated process. It is related to the process of appraising an universe of real estate properties, using common data and standard appraisal methodologies. Generally, the AVM is based on quantitative models (statistical, mathematical, econometric, etc.), related to the valuation of the properties gathered in homogeneous groups (by use and location) for which are collected samples of market data. The real estate data are collected regularly and systematically. Within the AVM, the proposed valuation scheme is an uniequational model to value properties in terms of widespread availability of sample …
Automatic research of the capitalization rate for the residential automated valuation: an experimental study in Cosenza (Italy).
When a market oriented approach is not applicable because of the lack of comparable sales data (Ciuna et al. 2014a), International Valuation Standards suggest the use of the Income Approach, which has the task of simulating the market through an economic and financial scheme. The central question of this approach is due to the quantification of the capitalization rate, whereas it is generally extracted in a market segment different from that of the subject. This paper intends to propose an automated valuation model of the capitalization rate based on a real estate database built through a computerized geocoding automatic procedure, starting from the application of statistical models of mult…
Automated Valuation Methods in Atypical Real Estate Markets Using the Mono-parametric Approach
The appraisal objectivity depends on the possibility to quickly and easily access to reliable real estate data in order to apply appropriate appraisal approaches. In order to ensure the objectivity of the real estate appraisals, in recent years Automated Valuation Methods (AVM) have been developed, integrating computerized real estate databases and programming languages. The Automated Valuation Methods proposed at international level usually recur to regression models, aimed to return appraisal equations based on reliable real estate databases. This approach is not applicable in some markets where lack of data does not allow the implementation of regression models. This paper proposes to im…
Property prices index numbers and derived indices
Purpose – A useful instrument to understand and examine the inner workings of the property trade is devising index numbers of property prices based on historical sequences of market prices. The present work aims at the definition of index numbers of property prices, proposing an innovative methodology compared with what usually recurs in literature. The purpose of this paper is to discuss these issues. Design/methodology/approach – The analysis proposed, based on the mechanisms of formation of stock indices, investigates the analogies between stock and property information, according to the peculiarities of the property trade, leading to a methodology approach, derived from Simple Price In…
Repeat Assessed Values Model for Housing Price Index
Abstract This study proposes an innovative methodology, named Repeat Appraised Price Model (RAV), useful for determining the price index numbers for real estate markets and the corresponding index numbers of hedonic prices of main real estate characteristics in the case of a lack of data. The methodological approach proposed in this paper aims to appraise the time series of price index numbers. It integrates the principles of the method of repeat sales with the peculiarities of the Hedonic Price Method, overcoming the problem of an almost total absence of repeat sales for the same property in a given time range; on the other hand, the technique aims to overcome the limitation of the repeat …
The Multilevel Model in the Computer-Generated Appraisal: A Case in Palermo
The construction of a mass appraisal model requires the preliminary study of the real estate market, the sampling of sold properties, the development of a forecasting model and the verification of the appraisal results. They are generally computerised methods, that work with geo-referenced data. This experimental work has proceeded to build a mass appraisal model, collecting a data sample of sales of apartments in the city of Palermo, in the five years 2008–2012, using a multivariate statistical model (multilevel), testing the results and providing the operating applications in a scheme of online real estate valuations.
Automated Procedures Based on Market Comparison Approach in Italy
The question about objective valuation is linked on the one hand to the identification of a large number of reliable sale data, on the other hand to the ability to control the critical evaluation protocol. Automating the valuation process, ensured by computerization of real estate data properly detected, provides a concrete answer to the problem of objectivity, allowing a significant control of the subjective component which characterizes the more traditional appraisals. Automatic methods traditionally proposed at international level are often set on multiple regression models, designed to build prediction functions that are valid throughout the study area, calibrating the coefficients on t…