1. The Improvement of Housing Appraisal Process with Street Block Housing Price Index Chung-Hsien Yang National Pingtung Institute of Commerce, Taiwan Szu-Jung Huang National Pingtung Institute of Commerce, Taiwan The 2010 Eureape Real Estate Society Conference June. 25 th 2010

2. What problems in Mass Appraisal? Poor attributes Limited data records and update Accuracy (still not great) Limited type (typical only) Limited Location

3. What problems in Location? Traditional location—county / district --Limited identify --Poor accuracy GIS location—(X n,Y n ) relationship --Poor economics meaning --Sampling orient in location relationship

4. Solution in this paper Street Block (SB) Price factor --use the mean price in street block (single or merge street blocks) --Modeling by sorting or comparison the Street Blocks

5. Advantage in SB solution Smaller location from traditional Real and stable location relationship Clear economics meaning Easy to judge the location factor and comparison the samples’ relationship

6. The Data(1/2) The transaction records of housing from broker in Da-An district/Taipei/Taiwan 2958 observations in 2006Q1~2008Q3 and 15% of market share in Da_An district Building type: all is apartment house Outliers detected (MRA model) and delete 10% out-sample and 90% in-sample by Quarterly district stratified random sampling

7. The Data(2/2) We follow Yang and Huang(2009) developed street block price index in Da_An district/Taipei city. We use MRA with street block dummy and 3 years panel data model. There are 47 blocks in the index.

8. Taipei city ( 台北市 ) Daan district ( 大安區 ) MRT : Zhongxiao Fuxing ( 忠孝復與 ) MRT : Zhongxiao Fuxing ( 忠孝復與 ) MRT:Taipei main station ( 台北車站 ) MRT:Taipei main station ( 台北車站 )

9. 105-117100-10596-10091-9586-9081-8576-8070-75

10. Daan district ( 大安區 )

11. Describe the Data of Da-An/ Taipei VariablesMean averageSTD Deviation Total Price (US$)436.2 K245.0 K Price per M sq4.1 K1.2 K Building Area106.2 M sq51.0 M sq Land Area21.7 M sq13.6 M sq Floor no.5.5F5.2F Total Floor8.6F4.5F Building Age23.7Y9.8Y

12. The Model The OLS form (semi-log) P: total price X: attributes of house L: location or street block factors T: Timing dummy variables

13. 5 models Model SettingDescription Model1no street block factor Model2L: street block price index Model3L: 21 dummies in 22 street blocks Model4L: 2 dummies in 3 parts from SBPI Model5L1: L in model3 L2: L in model4

14. The Variables Attributes of house: building area, sq. term; building age, sq. term; x th of floor, sq. term; total floor; building type; land area; MRT distance; car site dummy Time Dummy var. : 2006Q1~2008Q2=1, 2008Q3=0

15. Empirical process Sampling 100 times by quarterly for insample(90%) and outsample(10%) Run model1~model5 by various insample Check HitRate(10%, 20% of bias) and MAPE (mean absolute percentage error ) by various outsamples Test the difference of various models by t test.

16. Hitrate and MAPE

17. THE OUTPUT(1/4) (Hit Rate, 10% error) ModelHitRate Paired t test (t value), *: H0: M n -M 1 =0 (n~2,3,4,5) H0: M 5 -M 2 =0 H0: M 5 -M 3 =0 H0: M 5 -M 4 =0 1 45.00% 2 45.34% 2.43* 1.99* 3 45.58% 2.61* 1.21 4 45.41% 2.06* 1.67* 5 45.76% 3.43**

18. THE OUTPUT(2/4) (Hit Rate, 20% error) ModelHitRate Paired t test (t value) H0: M n -M 1 =0 (n~2,3,4,5) H0: M 5 -M 2 =0 H0: M 5 -M 3 =0 H0: M 5 -M 4 =0 173.17% 274.23% 8.11** 11.62** 375.95% 13.71** 5.21** 4 73.90% 4.37** 13.51** 5 76.49% 14.48**

19. THE OUTPUT(3/4) (MAPE) ModelMAPE Paired t test (t value) H0: M n -M 1 =0 (n~2,3,4,5) H0: M 5 -M 2 =0 H0: M 5 -M 3 =0 H0: M 5 -M 4 =0 1 15.19% 2 15.03% -7.28** -15.75** 314.59% -16.89** -9.06** 4 14.98% -9.48** -17.92** 5 14.47% -19.49**

20. THE OUTPUT(4/4) (MAPE, Hit Rate) Building Area Model Hitrate (10%) Paired t test (t value) Hitrate (20%) Paired t test (t value) MAPE Paired t test (t value) Under 54M 2 142.33% 12.62** 74.05% 13.84** 15.36% -21.08** 553.54%81.72%12.31% 54M 2 ~2 00M 2 147.58% 9.54** 77.55% 21.49** 13.48% -25.78** 550.57%82.04%12.51% Upper 200M 2 147.62% -1.47 71.13% 2.12* 15.79% 1.06 545.44%73.60%16.21%

21. Conclusion The Street Block Price factors has more quality control and better accuracy than traditional Mass Appraisal. Both the relationship of street blocks in price and the level of street block price have improved for Mass Appraisal.

22. Thank You