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Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Self-Reported Dwelling ValuationsHow Accurate Are They?,Dmitri RomanovLarisa FleishmanAviad Tur-Sinai,Israel Central Bureau of Statistics,There are three kinds of estimates for a dwelling value:,Price agreed upon in a sale transaction,Appraisers valuation,Owners self-reported valuation elicited by surveys with a question:,“What do you think your home is worth?That is,what do you think you could get for your home if you sold it now?,Uses,of s,elf-reported dwelling valuations,In calculating housing price index,In research of the housing market and households economic behavior,In micro-economic empirical analysis,as an indicator of households economic status and well-being,There is an immense importance to test the extent of accuracy of subjective dwelling valuations,the differences between these valuations and the benchmarks(appraiser estimates or sale prices)and the factors associated with these differences,Summary of previous research,The most referred studies that focused on investigation of accuracy of subjective dwelling valuations:Kain Kiel&Zabel(1999),On average,owners tend to,overestimate,the value of their homes by around 5%,though the estimates of the bias range from,minus,2 percent to 16 percent,The extent of overestimation is not correlated with owner,property or neighborhood characteristics,Thus,the surveys do provide reasonable estimates of dwelling valuations(with a uniform slight upward bias),Value-added of this study,Focus on investigating the accuracy of subjective valuations across a distribution of dwelling values,Based on a large dataset(more then 21K observations)that contains a rich variety of homeowner,dwelling,neighborhood and environment characteristics and covers more than a decade(19972021),Examine the interval of time in which“news about transaction prices in the respondents residential environment“trickle-down into individuals dwelling evaluations,This study aims:,To examine the extent of accuracy of homeowners subjective valuations,across a distribution of dwelling sale prices,while exploring:,whether the valuations of inexpensive and expensive properties are biased in the same direction;,whether the variance of the bias is homoscedastic across the distribution of property value,what factors are associated with the valuation bias,Data construction,Household Expenditure Surveys,Annual sample of more than 6000 households countrywide.Pooled sample of 72K in 12 years,Sale Transactions Files,612K transactions in 1997-2021,Research Dataset,Owners dwelling valuations,Demographic,social,economic indicators of the household and its head,Characteristics,of the property,Data on demographic and socioeconomic indicators of population by census tract,Prices,timing and number of transactions by census tract,Population Register,&,Income Tax records,GIS,Data on environment,and location indicators of neighborhood,Research population,Households:,that live in dwellings they own(71%of the survey sample);,whose dwellings were geo-referenced at the level of structure or census tract;,that provided valuation of their dwellings(less of 15%of item non-response);,that live in Israels sixty largest cities(assumed of having regular housing market conditions),After merging the records on these households with an average price of transactions in the census tract in the three-months window preceding the survey interview,working file contained 21,238 observations,Correlation between subjective valuation and average price of sales transactions in census tract,by deciles of valuation and period of time between valuation and sales transactions,Subjective valuation vs.average dwelling price in census tracts,by percentiles of dwelling-price distribution,19972021,Average bias of subjective valuation and its standard deviation,Average bias in subjective valuation by selected percentiles of annual dwelling-price distribution,19972021,Average price of dwelling,by selected percentiles of annual dwelling-price distribution,19972021(in current prices,index 1997=100),Main results(1),Homeowners tend to overestimate the value of their dwellings by 27 percent,with the median bias of 23 percent,The valuations of inexpensive and costly dwellings are biased in different directions:estimates reported by people who live in the dwellings that are placed in the first eight deciles of the price distribution are upward-biased,whereas those who live in the most expensive dwellings tend to understate the value of their homes,In relative terms,subjective valuations bias is much higher among the owners of inexpensive dwellings,Variance of valuation bias is heteroscedastic in the lowest 20 and the top 10 percentiles of the price distribution,The model,Dependent variable,:,bias in subjective dwelling valuation
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