Abstract
Abstract A statistical method of defining the impact of real estate attributes based on individual capacities of Hellwig’s information carriers was proposed in the paper. The method may be used for defining the impact of attributes in the Szczecin algorithm of real estate mass appraisal. The proposed procedure refers to the so-called Hellwig’s method, used for the selection of explanatory variables in an econometric model. In the case of real estate attributes, we typically deal with variables measured on an ordinal scale. Therefore, Kendall’s tau coefficients (tau a, tau b, tau c) will be applied in order to determine the strength and direction of a relation between variables. These coefficients enable the measuring of the strength and direction of a relation between variables measured on an ordinal scale. After valuating proper matrices of Kendall’s tau coefficients, individual capacities of Hellwig’s information carriers were determined, on the basis of which the impact of attributes in the Szczecin algorithm of real estate mass appraisal was defined. The proposed procedure was supported with an empirical example using a real data base that comprises 99 undeveloped land properties of industrial designation, including depots, storehouses, warehouses, and yards. After determining the impact of each attribute, the Szczecin mass appraisal algorithm was used to evaluate values. The obtained real estate values were very close to the values obtained by real estate experts.
Highlights
Determining the impact of attributes on real estate values is associated with a multitude of problems of a substantive, methodological or even organizational nature
With the use of a real data base, real estate appraisers’ valuations will be compared with the valuations obtained through the application of the Szczecin algorithm of real estate mass appraisal, including the impact of attributes defined with the application of the proposed method
The database of real estate value is essential for the application of the Szczecin mass appraisal algorithm
Summary
Determining the impact of attributes on real estate values is associated with a multitude of problems of a substantive, methodological or even organizational nature. Methodological problems arise from the fact that real estate attributes are usually qualitative variables measured on weak scales, such as a nominal scale and ordinal scale In these circumstances, it is impossible to use the methods suitable for strong scales (interval and ratio scale). When dealing with qualitative variables one needs to use measures such as, e.g. Kendall’s tau coefficients Another methodological problem is the frequent phenomenon of attribute collinearity. With the use of a real data base, real estate appraisers’ valuations will be compared with the valuations obtained through the application of the Szczecin algorithm of real estate mass appraisal, including the impact of attributes defined with the application of the proposed method
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