Many brokers have adapted their operation to exploit the potential of the web. Despite the importance of the real estate classifieds, there has been little work in analyzing such data. In this paper we propose a two-stage regression model that exploits the textual data in real estate classifieds. We show how our model can be used to predict the price of a real estate classified. We also show how our model can be used to highlight keywords that affect the price positively or negatively. To assess our contributions, we analyze four real world data sets, which we gathered from three different property websites. The analysis shows that our model (which exploits textual features) achieves significantly lower root mean squared error across the different data sets and against variety of regression models.
@cite_13: The loss given a default (LGD) is a key component when calculating the credit risk associated with an asset portfolio. However, the issue of default probability has not often been addressed in past mortgage loan data mining studies. The LGD has rarely been used to assess the comprehensive credit risk for a portfolio of mortgage loans. The location of a mortgaged property is strongly correlated with the price of that property as well as providing social, demographic, and economic information which inherently characterizes the mortgage loan population. Thus, to make an accurate assessment of the credit risk associated with the loan portfolio, one requires a specific data mining technique capable of determining the heterogeneity of the portfolio across regions. The sample utilized in this study consists of data on two thousand foreclosed mortgages in Kaohsiung City. We first test the homogeneity between the different city districts; second, we estimate the magnitude of the heterogeneity, including the spatial heterogeneity; third, a prior distribution for the heterogeneity is formulated using data mining methods; finally, the overall LGD, showing the credit risk for a given default probability is calculated.
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@cite_14: This article applies hedonic modeling techniques to estimate the value of a sample of apartment properties sold in the greater Portland, Oregon area. An equation for value as a function of location, amenities and capitalization rate is derived. This model explains about 95 of the variation in apartment property prices. Property values decline with increasing distance from the city center. Moreover, values are shown to rise less than proportionally to increases in project size and number of units and decline with project age. But the marginal effect of project aging is small.
@cite_8: This research reports results from a competition on modeling spatial and temporal components of house prices. A large, well-documented database was prepared and made available to anyone wishing to join the competition. To prevent data snooping, out-of-sample observations were withheld; they were deposited with one individual who did not enter the competition, but had the responsibility of calculating out-of-sample statistics for results submitted by the others. The competition turned into a cooperative effort, resulting in enhancements to previous methods including: a localized version of Dubin's kriging model, a kriging version of Clapp's local regression model, and a local application of Case's earlier work on dividing a geographic housing market into districts. The results indicate the importance of nearest neighbor transactions for out-of-sample predictions: spatial trend analysis and census tract variables do not perform nearly as well as neighboring residuals.
@cite_9: This paper compares alternative methods for taking spatial dependence into account in house price prediction. We select hedonic methods that have been reported in the literature to perform relatively well in terms of ex-sample prediction accuracy. Because differences in performance may be due to differences in data, we compare the methods using a single data set. The estimation methods include simple OLS, a two-stage process incorporating nearest neighborsâ€™ residuals in the second stage, geostatistical, and trend surface models. These models take into account submarkets by adding dummy variables or by estimating separate equations for each submarket. Based on data for approximately 13,000 transactions from Louisville, Kentucky, we conclude that a geostatistical model with disaggregated submarket variables performs best.
@cite_17: This paper describes a first effort to design and implement an adaptive neuro-fuzzy inference system based approach to estimate prices for residential properties. The data set consists of historic sales of homes in a market in Midwest USA and it contains parameters describing typical residential property features and the actual sale price. The study explores the use of fuzzy inference systems to assess real estate property values and the use of neural networks in creating and fine tuning the fuzzy rules used in the fuzzy inference system. The results are compared with those obtained using a traditional multiple regression model. The paper also describes possible future research in this area.
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@cite_2: This article presents a data-driven framework for housing market segmentation. Local marginal house price surfaces are investigated by means of mixed geographically weighted regression and are reduced to a set of principal component maps, which in turn serve as input for spatial regionalization. The out-of-sample prediction error of a hedonic pricing model is applied to determine a “near-optimal” number of spatially coherent and homogeneous submarkets. The usefulness of this method is demonstrated with a detailed data set for the Austrian housing market. The results provide evidence that submarkets must always be considered, however they are defined, and that the proposed submarket taxonomy on a regional level significantly improves predictive quality compared to (1) a traditional pooled model, (2) a model that uses an ad hoc submarket definition based on administrative units, and (3) a model incorporating an alternative submarket definition on the basis of aspatial k-means clustering. Moreover, it is con...
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@cite_20: This paper introduces an integrative approach to hedonic house price modeling which utilizes high density 3D airborne laser scanning (ALS) data. In general, it is shown that extracting exploratory variables using 3D analysis – thus explicitly considering high-rise buildings, shadowing effects, etc. – is crucial in complex urban environments and is limited in well-established raster-based modeling. This is fundamental in large-scale urban analyses where essential determinants influencing real estate prices are constantly missing and are not accessible in official and mass appraiser databases. More specifically, the advantages of this methodology are demonstrated by means of a novel and economically important externality, namely incoming solar radiation, derived separately for each flat. Findings from an empirical case study in Vienna, Austria, applying a non-linear generalized additive hedonic model, suggest that solar radiation is significantly capitalized in flat prices. A model comparison clearly proves that the hedonic model accounting for ALS-based solar radiation performs significantly superior. Compared to a model without this externality, it increases the model’s explanatory power by approximately 13 and additionally reduces the prediction error by around 15 . The results provide strong evidence that explanatory variables originating from ALS, explicitly regarding the immediate 3D surroundings, enhance traditional hedonic models in urban environments.
@cite_11: This paper presents the insights gained from applying data mining techniques, in particular neural networks for the purposes of developing an intelligent model used to predict real estate property values based on variety of factors. A dataset of over one thousand transactions in real estate properties was used. The dataset included 15 variables obtained from the multiple listing system (MLS) database and captured information on transactions taking place during a period of three years. The results from applying data mining techniques to predict real estate values are promising. Future plans and recommendations for further expanding the study are given.
Due to the importance of valuating a real estate property, there has been extensive research on automatic valuation @cite_10 @cite_3 @cite_8 @cite_9 @cite_18 @cite_20 . Most of that work used hedonic models, which assumed the price can be predicted from a combination (usually linear) of the property structured features @cite_14 such as number of bedrooms and the location. Traditional hedonic models were based on human expertise, where the model parameters are usually hand-coded by experts, unlike our proposed method here, which uses data mining. There has been growing literature on the use of data mining techniques to analyze real estate data @cite_11 @cite_17 @cite_13 @cite_12 @cite_2 , however, most of the previous work focused only on structured features and ignored textual features. We review sample of these works in the remainder of this section.