Abstract
Price and residential housing attributes have long been identified as key determinants of home sales and, as such, they can explain time-on-the-market (TOM). It is acknowledged, however, that there are other factors (or determinants) that influence home sales and TOM, which are of great importance but seldom taken into account in the appraisal process of residential real estate. Based on the use of fuzzy cognitive mapping, we propose a framework that adds value to the way that key determinants of housing sales and TOM are identified. This framework is the result of a process involving several residential real estate experts (i.e.appraisers and realtors), and follows a constructivist approach. Our findings suggest that the use of fuzzy cognitive maps (FCMs) allows the number of omitted determinants to be reduced and the understanding of the relationships between them to be improved. The strengths and weaknesses of our methodological framework are also discussed.
Highlights
Understanding the conditions of the residential housing market and the key attributes that determine home sales and the time taken to sell a property, broadly known as time-on-the-market (TOM), is crucial in facilitating a timely and mutually beneficial sale
These determinants of home sales are difficult to operate because residential housing usually aggregates conflicting factors that interfere with market value and TOM
We started the operational phase of the session by asking the panel members the following trigger question: “Based on your own values and professional experience, what are the main determinants of housing sales and TOM?”
Summary
Understanding the conditions of the residential housing market and the key attributes that determine home sales and the time taken to sell a property, broadly known as time-on-the-market (TOM) (cf. Cheng et al 2008), is crucial in facilitating a timely and mutually beneficial sale. We use fuzzy cognitive maps (FCMs) to support the identification of key determinants of housing sales and TOM. Our aim is to build a cognitive map, in particular a FCM, to model, dynamically analyze and test the reciprocal influence of key determinants of housing sales and TOM. This means that we will try to identify the factors that determine TOM and their causal relationships, including their cause-effect intensities, by using data/ information collected from a panel of residential real estate experts (i.e. professional appraisers and realtors). The paper finishes with concluding remarks and some lines for future research
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