Real Estate Valuation Theory (eBook)

A Critical Appraisal

Manya M. Mooya (Autor)

eBook Download: PDF

2016 | 1st ed. 2016
XII, 185 Seiten
Springer Berlin (Verlag)
978-3-662-49164-5 (ISBN)

Infos

This monograph critically reviews and updates real estate valuation theory, which is based on neoclassical economics, in light of developments in heterodox economic theory. Building on a comprehensive historical account of the evolution of value theory, the book uses new institutional economics theory and critical realism as lenses through which problems in standard valuation theory and practice are expatiated, and as the foundation for an alternative theory. The new theory is employed to explain major problems in real estate valuation that are beyond the capability of the standard theory, such as price bubbles in real estate markets, anchoring bias, client influence and valuation under uncertain market conditions.

Manya M. Mooya holds a PhD in Real Estate from the University of Pretoria, an MPhil in Land Economy from the University of Cambridge and a BSc in Land Economy from the Copperbelt University. He is currently Senior Lecturer in Property Studies in the Department of Construction Economics and Management at the University of Cape Town. He teaches courses on property valuation at both the undergraduate and postgraduate levels. His research work, both theoretical and applied, focuses on the twin questions of how value is created in real estate markets and on the links between these markets and capital accumulation. 

Inhalt

Preface 6
References 9
Contents 10
1: Standard Theory of Real Estate Market Value: Concepts and Problems 14
Introduction and Overview 14
Real Estate Valuation 15
The Importance of Real Estate Markets and of the Concept of Market Value 15
Defining Economic Value 18
The Standard Definition of `Market Value´ 19
Real Estate Valuation 20
Theory, Paradigms and Research Programmes 22
The Role of Theory in Knowledge Production 22
Good Theory, Bad Theory 23
Of Paradigms and Research Programmes 24
Neoclassical Economics Foundations of Standard Market Value Theory 25
Rational Choice 26
Full Information and Homogenous Product 27
Equilibrium 28
Summary Implications: The Neoclassical Perfect Market 29
Standard Market Value Theory: Problems and Controversies 29
Crisis in Real Estate Valuation 29
Problems in Valuation Practice 30
Problems of Theory 31
An Alternative Theory 32
Barriers to Progress 32
References 33
2: Aristotle to Marshall: The Evolution of Economic Value Theory 35
Introduction and Overview 35
The Greco-Roman Period 37
The Middle Ages 39
Mercantilism 41
Physiocracy 44
The Classical School 46
The Austrian (Marginal Utility) School 48
The Neoclassical and Equilibrium Schools 51
Concluding Comments 52
References 53
3: Neoclassical Economic Theory andTraditional Valuation Methods 54
Introduction and Overview 54
Ontological and Methodological Principles 55
The Sales Comparison Method 57
Sales Comparison and Economic Theory 58
Theoretical and Practical Problems of the Sales Comparison Method 59
The Investment Method 60
Investment Method and Economic Theory 61
Theoretical and Practical Problems of the Investment Method 62
The Accounts Method 62
The Accounts Method and Economic Theory 63
Theoretical and Practical Problems of the Accounts Method 64
The Cost Method 66
The Cost Method and Economic Theory 66
Theoretical and Practical Problems of the Cost Method 69
The Residual Method 70
The Residual Method and Economic Theory 70
Theoretical and Practical Problems of the Residual Method 72
Conclusion 73
References 74
4: Neoclassical Economic Theory andAutomated Valuation Models 75
Introduction and Overview 75
Types of AVMs 76
Hedonic Models 76
Econometric Forecasts 76
Intelligent Systems 77
House Price Index Models 77
Tax Assessed Value Models 77
Automated Valuation Models and Neoclassical Economic Theory 77
The Regression Function 77
AVMs and Economic Theory 78
AVMs and Rational Choice 78
AVMs and Market Information 79
AVMs, Competition and Equilibrium 80
The Marginalist Roots of AVM Theory 81
Methodology of Automated Valuation Models 83
A Positivist Methodology 83
The Covering-Law Model 84
The Regression Function as General Law 86
Contrasting AVMs and Traditional Valuation Methods 87
Concluding Comments 92
References 92
5: Real Estate Markets and Neoclassical Economic Theory: A Heterodox Critique 93
Introduction and Overview 93
Heterodox Economic Theory 94
Critical Realism 94
New Institutional Economics 96
Critique of the Pillars of Neoclassical Economic Theory 99
Rational Choice 99
Equilibrium 100
Positivism 102
The Nature of Real Estate and Real Estate Markets 105
Real Estate as an Economic Good 105
Real Estate Markets 109
Real Estate Markets and Neoclassical Economic Theory 110
Comparing Real Estate Markets and the Perfectly Competitive Market 111
The Efficiency of Real Estate Markets 112
Real Estate Markets and Neoclassical Economic Theory: Summary 113
Implications of the Heterodox Critique on the Standard Theory of Market Value 114
Conclusion 115
References 115
6: An Alternative Theory of Market Value: Ontological Foundations 117
Introduction and Overview 117
The Nature of Social Reality: Being and Becoming 118
A Stratified Ontology 119
Mechanisms and Structures 123
The Structure-Agency Problem 126
Social Reality in Practice 128
Real Estate Markets in Reality: A Re-description 130
New Institutional Economics and Critical Realism 130
Institutions, Transaction Costs and Real Estate Markets 132
Continuum of Real Estate Markets 132
The Paradox of Market Value 137
Concluding Comments 138
References 139
7: An Alternative Theory: Market Value as Convention and as Emergence 140
Introduction and Overview 140
A Realistic Conception of Real Estate Market Value 140
Market Value as Convention 141
Market Value as Emergence 148
Closing the Circle: Market Value as Convention and as Emergence 152
Concluding Comments 157
References 157
8: Applications to Problems of Theory and Practice 159
Introduction and Overview 159
New Versus Old: Comparing the Alternative to the Standard Theory 160
Problems with the Definition, Character and Determination of Market Value 162
Problems of Thin or Absent Real Estate Markets 166
Price Bubbles and Crashes: A Problem of Competitive Real Estate Markets 169
Valuers, Valuation and the 2005-2008 US House Price Bubble 177
Automated Valuation Models Versus Manual Valuations 181
Econometric Forecasting of Real Estate Market Prices 182
Concluding Comments 184
References 185
Postscript 187
Index 189

Produkt-Details

• Erscheint lt. Verlag: 17.3.2016
• Zusatzinfo: XII, 185 p.
• Verlagsort: Berlin
• Sprache: englisch
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre
• Schlagworte: Heterodox economics • Neoclassical Economic Theory • New Institutional Economics • real estate markets • valuation theory
• ISBN-10: 3-662-49164-8 / 3662491648
• ISBN-13: 978-3-662-49164-5 / 9783662491645