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Appraisal methods and the non-agency mortgage crisis

Research output: Chapter in Book/Report/Conference proceedingChapter (peer-reviewed)peer-review

  • Tom Johannes Kauko
  • Maurizio d'Amato
An increasing amount of attention is directed to the links between the financial system and real estate. This paper ties to this discussion insofar as it focuses on the relationship between the methodology of property valuation and the recent non agency or subprime crisis. After a brief discussion of the crisis various questions are raised concerning both the theoretical background and the application of property valuation, property management and automated valuation modelling. Despite the magnitude of the crisis in terms of the financial loss suffered, our observation is that the mainstream real estate academia is still essentially preoccupied with the task of integrating financial and property markets. Apparently, after the crisis financial models based on the concept of perpetual increasing income are still used, and deterministic relations between value and property characteristics still constitute the dominant paradigm. In the hope to avoid repeating the errors that led to the crisis we identify the need to analyse this crisis also from a property valuation point of view. We contend that in depth analysis of the tools used in property valuation is necessary to understand why and how valuation methods should be improved given recent experiences.
Original languageEnglish
Title of host publicationAdvances in Automated Valuation Modeling
EditorsMaurizio d'Amato, Tom Kauko
Place of PublicationCham, Swizerland
PublisherSpringer
Pages23-32
Number of pages10
ISBN (Electronic)978-3319497464
ISBN (Print)978-3319497440
DOIs
Publication statusPublished - 2017

Publication series

NameStudies in Systems, Decision and Control
PublisherSpringer
Number86
ISSN (Print)2198-4182
ISSN (Electronic)2198-4190

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