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The Accuracy of Long-term Real Estate Valuations

Author

Listed:
  • Rainer Schulz
  • Markus Staiber
  • Martin Wersing
  • Axel Werwatz

Abstract

By using a unique data set of single-family house transactions, we examine the accuracy of the cost and sales comparison approach over different forecast horizons. We find that sales comparison values provide better long-term forecasts than cost values if the economic loss function is symmetric. A weighted average of both sales comparison value and cost value can reduce this loss even further. If the economic loss function is asymmetric, however, cost values might provide better long-term forecasts.

Suggested Citation

  • Rainer Schulz & Markus Staiber & Martin Wersing & Axel Werwatz, 2008. "The Accuracy of Long-term Real Estate Valuations," SFB 649 Discussion Papers SFB649DP2008-019, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  • Handle: RePEc:hum:wpaper:sfb649dp2008-019
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    References listed on IDEAS

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    More about this item

    Keywords

    prediction accuracy; mortgage underwriting; risk management;

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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