Municipal Non-Residential Real Property Valuation Forecast Accuracy

Arnold Cote, K. Nicole and Smith, Wm. Doyle and Fullerton, Thomas M., Jr. (2010): Municipal Non-Residential Real Property Valuation Forecast Accuracy. Published in: International Journal of Business & Economics Perspectives , Vol. 6, No. 1 (22 March 2011): pp. 56-77.

Abstract

The objective of this study is to estimate the accuracy and/or reliability of alternative methods of forecasting property valuations of non-residential real commercial and industrial property in El Paso to improve municipal revenue forecasting. This study seeks to identify and evaluate four econometric and statistical alternatives to present forecasting practices for nonresidential property valuation forecasts: (1) a traditional income elasticity method, (2) a regional structural econometric model, (3) a statistical ARIMA method, and (4) trend analysis. In order to evaluate the four models, ex ante forecast simulations are created for each modeling approach and then compared to random walk and random walk with drift models for both commercial and industrial property values. Results indicate that the random walk with drift model outperformed all four models for both commercial and industrial property values. In addition, results also indicate that the random walk model outperformed all four models for industrial property values.

• Item Type: MPRA Paper
• Language: English
• Keywords: Non-residential property valuation forecasts; regional economics; applied econometrics
• Subjects: C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C53 - Forecasting and Prediction Methods ; Simulation Methods; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue

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