Valuation of immovables based on an econometric models

Abstract

The main purpose of this analysis is to judge the practical utility of mass-valuation methods ? particularly the econometric modelling for valuation of dwellings. One of the most important part of this article is a research of value of flats in Warsaw based on a database provided by LOCUS real estate agency. The analysis have been made in three different ways. The first approach concerns the value of flats during the boom in real estate market. In this part there were verified the major factors and trends that have impact on the market value in nine Warsaw districts. Then there were showed exemplary econometric models of value of flats in Warsaw ? created for sample just before the recession in real estate market. The new idea of valuation by econometric methods is to apply cross-section models. In the second part of this article database from the period of recession was analyzed. It was mentioned that statistical features of the sample had changed and the precision of the modeling had decreased. The author presents a cross-section model that would be applied for valuation of flat in current real estate market. In the third part there were presented suggestions and proposals for application of econometric models to estimate the value of flats during the recession and before. Moreover considerations have been supported by a group of practical problems connected with econometric modeling of value in real estate market.