1. Regression Method in Real Estate Price Index Construction A multivariate analysis is one of the ways to compute for the value of the determinants of real estate prices. “Multivariate analysis explores the association between one outcome variable (referred to as the dependent variable) and one or more predictor variables (referred to as independent variables)” [University of Michigan 2010]. The techniques in a multivariate analysis show the significance of the relationship between two or more variables. However, analysis of real estate prices is not limited to the Multivariate Analysis method. Aminah Md Yusof and Syuhaida Ismail [2012] used not only Multiple Regression Analysis, but also the Hedonic Regression Analysis. Their aim …show more content…
It has become a form of stock capital, given the expectations of increasing prices, and a means of obtaining financial gains through rental revenues and sale profits. As a consequence, the real estate market value has become a parameter of extreme importance. The estimation of a real estate value is usually done using a hedonic pricing equation according to the methodology proposed by Rosen [1974]. This is seen as a heterogeneous good comprised of a set of characteristics and it is then important to estimate an explicit function, called hedonic price function, that determines which are the most influential attributes, or attribute “package”, when it comes to determining its price. However, the estimation of a hedonic equation is not a trivial task since the theory does not determine the exact functional form nor the relevant conditioning variables [Cribari-Neto, Florencio & Ospina …show more content…
We estimate the location and scale effects semi-parametrically in such a way that some covariates (the geographical coordinates of the land lot, for instance) enter the predictor non-parametrically and their effects are estimated using smoothing splines (see Silverman, [1984]; Eubank, [1999]) whereas other regressors are included in the predictor in the usual parametric fashion. The model delivers a fit that is clearly superior to those obtained using the usual
Richard Romano is one of the three principals at Cruickshank, Gath, & Romano. With eight years of experience and recognized by industry insiders as one of Canada's leading real estate experts, Richard wants to complete the appraisal according to his best estimate of the pro...
Gentrification is defined as the process by which the wealthy or upper middle class uproot poorer individuals through the renovation and rebuilding of poor neighborhoods. Many long-term residents find themselves no longer able to afford to live in an area, where the rent and property values are increasing. Gentrification is a very controversial topic, revealing both the positive and negative aspects of the process. Some of the more desirable outcomes include reduced crime rate, increased economic activity, and the building of new infrastructures. However, it is debated whether the negatives overwhelm the positive. An increase in the number of evictions of low-income families, often racial minorities can lead to a decline of diversity
Leonard, T., & Murdoch, J. C. (2009). The neighborhood effects of foreclosure. Journal of Geographical Systems, 11(4), 317-332. doi:10.1007/s10109-009-0088-6
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
area, and I felt it would be a good idea to gain the knowledge of the
Rebecca Young has finished taking her Master of Business Administration and decided to move to Toronto in May 2013. She moves to a new place to follow her desire on finding a new job in investment banking. She rents a spacious condominium with two bedrooms in it with the rents of $ 3,000 per month. In July 2014, the same condominium unit next to her condominium are decided to be sold. Young believed that she could afford the condominium for $ 600,000. However, she felt that she bought a condominium that will not meet her long-term needs. Thus, Young decided to sell it in two to ten years. Analysis of Young's decision to buy or rent a condominium from the quantitative side is the suitable way to get the best financial decisions.
William Goetzmann, a. L. (2006). Estimating House Price Indexes in the Presence of Seller Reservation Prices. Review Of Economics and Statistics. pp. 100-112.
In the article “Gentrification’s Insidious Violence: The Truth about American Cities” by Daniel Jose Older, Older places emphasis on the neighboring issue of gentrification in minority, low income communities or as better known as being called the “hood” communities. The author is biased on how race is a factor in gentrifying communities by local governments. Older explains his experience as a paramedic aiding a white patient in the “hood” where he was pistol whipped in a home invasion by a black male. This is an example of black on white crime which is found to be a normal occurrence in the residence of his community. But that is not the case in Older’s situation because that was the first time he has
Zhang, Junfu. (2011). Tipping and Residential Segregation: A Unified Schelling Model. Journal of Regional Science. 51 (1), Pg. 167-193.
Silva, Julie A. and Robin M. Leichenko. Economic Geography. Vol. 80, No. 3 (Jul., 2004), pp. 261-
This paper is written to provide a reasonably comprehensive overview of Section 1031 of the IRC as it pertains to real estate transactions, and to offer some thoughts on the wealth-creation advantages that 1031 Exchanges offer.
In valuing the developable land at Canary Wharf, there are several factors to take into account. Namely, it is crucial to decide on an appropriate rate at which to discount the projected cash flows for the property. The developable properties of Canary Wharf come with considerable risk. For example, the London office market downturn, as well as significant market hits for the large financial services tenants of Canary Wharf, presents serious tenant lease up and lease covenant negotiation risks. How long will it take to attract quality tenants to the buildings, especially as financial services tenants are currently stressed? Additionally, the requirement for further planning consent on the buildings indicates that construction on three of the sites can not commence for a number of years. How can one accurately predict the market in the future? Will the London Office market significantly improve or continue to decline? What will interest rates look like? Songbird must consider the risk of valuing such sites several years into the future. Further, Songbird must consider the weighty transportation risk. If the Crossrail project does not come to fruition in a timely manner with necessary approvals, development will not proceed as planned, causing cost overruns and heavy construction delays. Assuming that Canary Wharf is able to get the necessary transportation approvals, Canary Wharf's projected cash flows should be discounted at 12.5% in order to mitigate risks to be faced. Given this discount rate, as well as considering all taxes, debt obligations, rents and rent-free periods, and all construction costs, an appropriate bid on the developable sites at Canary Wharf is ₤809,000 (the Net Present Value of the cash flows, discounted at 12.5%). Please see Exhibit 1 for a detailed pro forma of all projected cash flows.
Methodology: I imported the vector data sets for Sheffield’s secondary school catchment areas which was provided by University of Sheffield Urban Planning department and Sheffield’s property prices 2010-2016 which were downloaded from Land Register (2018), into ArcMap. GIS was used for this study as it enables two kinds of data to be displayed on the same map through multilayering mapping. This is advantageous as it shows a direct visual comparison of house prices and Ofsted ranking in
Most people, today, are looking forward to buying their first property. When individuals decide to buy a house those individuals would have to look at all their options and all the advantages and disadvantages that come from purchasing a house. The economy plays a huge role in the decision whether people will purchase a house, purchase a condominiums, or rent property.
When prices increase, the quantity decrease (Graph 1) and new firms enter the market in order to make economic profits. However this does not mean the real estate agents or brokers earn more money. On the contrary, the prices they charge may increase, but the number of houses each sell do not change (Goolsbee, 2005, Online). From this it is evident that the price of products in the real estate market is not affected by the entry of new firms.