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Journal cover: International Journal of Housing Markets and Analysis

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Online from: 2008

Subject Area: Built Environment

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Detecting and validating residential housing submarkets: A geostatistical approach for use in mass appraisal


Document Information:
Title:Detecting and validating residential housing submarkets: A geostatistical approach for use in mass appraisal
Author(s):William J. McCluskey, (School of the Built Environment, University of Ulster, Jordanstown, UK), Richard A. Borst, (Cole Layer Trumble Division, Tyler Technologies, Inc., Philadelphia, Pennsylvania, USA)
Citation:William J. McCluskey, Richard A. Borst, (2011) "Detecting and validating residential housing submarkets: A geostatistical approach for use in mass appraisal", International Journal of Housing Markets and Analysis, Vol. 4 Iss: 3, pp.290 - 318
Keywords:Geostatistics, Mass appraisal, Residential property, Segmentation, Submarkets, United States of America
Article type:Research paper
DOI:10.1108/17538271111153040 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Abstract:

Purpose – The purpose of this paper is to describe a segmentation technique based on geostatistical modeling methods utilizing geographically weighted regression (GWR) to identify submarkets which could be applied within the mass appraisal environment.

Design/methodology/approach – Given the spatial dimension within which neighbourhoods/submarkets exist, this paper has sought to utilize the geostatistical technique of GWR to identify them.

Findings – The efficacy of the procedure is established by demonstrating improvements in predictive accuracy of the resultant segmented market models as compared to a baseline global unsegmented model for each of the study areas. Optimal number of segments is obtained by measures of predictive accuracy, spatial autocorrelation in the residual errors and the Akaike information criterion.

Research limitations/implications – The three datasets used allowed for an evaluation of the robustness of the method. Nonetheless it would be beneficial to test it on other datasets, particularly from different regions of the world.

Practical implications – Many researchers and mass appraisal practitioners have established the benefit of segmenting a study area into two or more submarkets as a means of incorporating the effects of location within mass valuation models. This approach develops the existing knowledge.

Social implications – The research ultimately is developing more accurate valuation models upon which the property tax is based. This should create an environment of fair and acceptable assessed values by the tax paying community.

Originality/value – The contribution of this work lies in the methodological approach adopted which incorporates a market basket approach developed through a process of GWR. The importance of the research findings illustrate that submarket segmentation need no longer be an arbitrary process.



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