Measurement Error in Residential Property Valuation: An Application of Forecast Combination
41 Pages Posted: 30 May 2015 Last revised: 18 Sep 2016
Date Written: July 6, 2016
In this study we use property-level transaction data to construct several different out-of-sample forecasts for the sales of individual homes in 10 counties in Florida. We utilize a number of common forecast combination methods and analyze the properties of their forecast errors. The results from this analysis suggest that relatively simple forecast combination schemes have the potential to reduce the error in property value estimates, possibly by a wide margin. Lastly, we find that the forecast error associated with constructing valuations using popular house price indices has been very large in our sample.
Keywords: Housing Valuation, Forecast Combination
JEL Classification: C53, R31
Suggested Citation: Suggested Citation