The accuracy of long-term real estate valuations

Rainer Schulz, Markus Staiber, Martin Wersing and Axel Werwatz

No 2008-019, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: By using a unique data set of single-family house transactions, we examine the accuracy of the cost and sales comparison approach over different forecast horizons. We find that sales comparison values provide better long-term forecasts than cost values if the economic loss function is symmetric. A weighted average of both sales comparison value and cost value can reduce this loss even further. If the economic loss function is asymmetric, however, cost values might provide better long-term forecasts.

Keywords: prediction accuracy; mortgage underwriting; risk management (search for similar items in EconPapers)
JEL-codes: C52 C53 (search for similar items in EconPapers)
Date: 2008
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