Efficient property value estimation for single‐family homes in central Florida

Abstract This paper proposes the use of a metafrontier efficiency analysis approach to estimate residential property values. The objective is to mitigate inefficiencies in these valuations, thereby enhancing tax revenue and fairness in tax burdens. Property features (such as acreage, living area, number of bedrooms, number of bathrooms, age, and pool presence) along with contextual variables (such as county and median household income) are utilized to estimate just market value. Observations can be grouped based on some of these variables, allowing a metafrontier analysis to be conducted. This analysis not only assesses efficiency scores but also identifies technology gaps for each group. Furthermore, the proposed approach can be employed to estimate the value of any property based on its characteristics. To illustrate the proposed approach, we utilize data on over 30,000 properties in Orange and Seminole Counties in central Florida. Additionally, we present the results of a robust regression approach for comparison purposes. While our approach can serve as a valuable tool across various sectors, its primary aim is to promote best practices in governance regarding land use and real estate valuation. This includes balancing multiple objectives such as tax revenue, economic growth, environmental sustainability, and social considerations.