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Inferring an Investment Return Series for Real Estate from Observations on Sales
Author(s) -
Quan Daniel C.,
Quigley John M.
Publication year - 1989
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00487
Subject(s) - real estate , cost approach , economics , investment (military) , econometrics , value (mathematics) , series (stratigraphy) , rate of return , investment value , income approach , capitalization rate , return on investment , computer science , financial economics , finance , actuarial science , microeconomics , real estate investment trust , machine learning , paleontology , cash , production (economics) , politics , political science , law , biology
Accurate measurement of the returns to real estate investment are essential to sound analysis. This paper improves upon the traditionally employed method—collecting comparable sales data. A dynamic model of real estate appraisal is developed in which agents have incomplete information, heterogeneous search costs, and varying expectations. Various types of simulation analysis of the model indicate it performs best in the sense that the return estimate converges to the true value faster than other simpler rules.