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A Connection between Paired Data Analysis and Regression Analysis for Estimating Sales Adjustments

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Abstract

The two methods most often recommended for obtaining market-derived adjustments utilized in the sales comparison approach to appraisal are Paired Data Analysis and Multiple Regression Analysis. These approaches are viewed as competing alternatives, with advocates and detractors for each. The main purpose of this paper is to demonstrate that these two alternatives to estimating sales adjustments are equivalent under certain circumstances. This point of equivalence may prove to be a useful starting place for improving our understanding of the differences between and similarities of the two methods. After explaining the data requirements of each method, we provide a set of sufficient conditions under which the two methods produce identical adjustment estimates. We finish with a discussion ofrelative advantages and disadvantages of these two methods in estimating sale comparison adjustments.

Suggested Citation

  • Joseph B. Lipscomb & J. Brian Gray, 1995. "A Connection between Paired Data Analysis and Regression Analysis for Estimating Sales Adjustments," Journal of Real Estate Research, American Real Estate Society, vol. 10(2), pages 175-184.
  • Handle: RePEc:jre:issued:v:10:n:2:1995:p:175-184
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    References listed on IDEAS

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    1. Kerry D. Vandell, 1979. "Alternative Estimation Methods for Reduced form Price Equations under Conditions of Multicollinearity: A Comment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 7(3), pages 427-436.
    2. Otis W. Gilley & R. Kelley Pace, 1990. "A Hybrid Cost and Market-Based Estimator for Appraisal," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 75-88.
    3. Joseph B. Lipscomb & J. Brian Gray, 1990. "An Empirical Investigation of Four Market-Derived Adjustment Methods," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 53-66.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Peter F. Colwell & Roger E. Cannaday & Chunchi Wu, 1983. "The Analytical Foundations of Adjustment Grid Methods," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 11(1), pages 11-29.
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    Cited by:

    1. Lisi, Gaetano & Iacobini, Mauro, 2012. "Estimation of a Hedonic House Price Model with Bargaining: Evidence from the Italian Housing Market," MPRA Paper 66474, University Library of Munich, Germany.
    2. Gaetano Lisi & Mauro Iacobini, 2013. "Real estate appraisals, hedonic models and the measurement of house price dispersion," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(1), pages 61-73.
    3. Rohana Abdul Rahman, 2011. "Variations in Implementing SCM to Minimize Subjectivity and a Future Direction for Malaysia," ERES eres2011_178, European Real Estate Society (ERES).

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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