System and method for providing house price forecasts based on repeat sales model

• US 6,401,070 B1
• Filed: 07/15/1998
• Issued: 06/04/2002
• Est. Priority Date: 10/11/1996
• Status: Expired due to Term

• Current Assignee: Freddie Mac
• Original Assignee: Freddie Mac
• Inventors: Mumey, Sol T., McManus, Douglas A.
• Primary Examiner(s): Millin, V.
• Assistant Examiner(s): PATEL, JAGDISH
• Application Number:
  US09/115,831
• Time in Patent Office: 1,420 Days
• Field of Search: 705/1, 705/10, 705/35, 705/37
• US Class Current: 705/313
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 50/16 Real estate

Abstract

Method and system for estimating real estate property values based on repeat sales model. The method estimates the price index using property value data from refinance transactions, as well as from purchase transactions. In so estimating, the method compensates for the transaction bias arising from using data from refinance transactions, which may exhibit incentive and selection biases. The property at issue may be estimated based on the so-computed price index. The price index and/or the bias component may be estimated using nonparametric functions.

Claims

1. A method of estimating the value of a real estate property, comprising the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index indicating a change of the values of the plurality of properties over time, wherein the time-varying price index takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties; and

estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

2. The method of claim 1, further comprising the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

3. The method of claim 1, further comprising the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

4. The method of claim 2, wherein the step of determining a value of the predetermined property includes the substep of determining the value based on a value of the predetermined property from a purchase transaction at a second time, different from the first time.

5. The method of claim 2, wherein the step of determining a value of the predetermined property includes the substep of determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time.

6. The method of claim 3, wherein the step of determining a value of a predetermined property includes the substep of determining the value based on a value of the predetermined property from a purchase transaction at a second time, different from the first time.

7. The method of claim 3, wherein the step of determining a value of a predetermined property includes the substep of determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time.

8. The method of claim 5, wherein the step of determining a value of the predetermined property includes the substep of taking into account a transaction type bias arising from the use of the value from the refinance transaction at the second time.

9. The method of claim 6, wherein the step of determining a value of a predetermined property includes the substep of determining the value, taking into account a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

10. The method of claim 7, wherein the step of determining a purchase value includes the substep of taking into account a transaction type bias arising from the use of the value from the refinance transaction at the second time and a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

11. The method of claim 1, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

12. The method of claim 1, wherein the different types of transactions include refinance and purchase transactions.

13. A method of estimating the value of a real estate property, comprising the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time; and

estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

14. The method of claim 13, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

15. The method of claim 13, further comprising the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

16. The method of claim 13, further comprising the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

17. The method of claim 13, wherein the step of determining includes the substep of estimating the price index using a spline function.

18. The method of claim 13, wherein the step of determining includes the substep of estimating the price index using a linear spline function.

19. The method of claim 17, wherein the spline function includes one or more knot points.

20. The method of claim 19, wherein the placement of the knot points is dynamically determined by the set of property value data corresponding to the plurality of properties in the database.

21. The method of claim 20, further comprising the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

22. The method of claim 20, further comprising the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

23. A method of estimating the value of a real estate property, comprising the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time and takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties; and

estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

24. The method of claim 23, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

25. The method of claim 23, wherein the different types of transactions include refinaace and purchase transactions.

26. The method of claim 23, further comprising the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

27. The method of claim 23, further comprising the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

28. The method of claim 23, wherein the step of determining the price index includes the substep of estimating the price index using a spline function.

29. The method of claim 23, wherein the step of determining the price index includes the substep of estimating the price index using a linear spline function.

30. The method of claim 23, wherein the step of determining the price index includes the substep of estimating the transaction type bias between the property value data derived from refinance transactions and the property value data derived from purchase transactions using a nonparametric technique.

31. The method of claim 23, wherein the step of determining the price index includes the substep of estimating the transaction type bias between the property value data derived from refinance transactions and the property value data derived from purchase transactions using a spline function.

32. The method of claim 26, wherein the step of determining a value of the predetermined property includes the substep of determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time, and the determining a value of the predetermined property takes into account a transaction type bias arising from the use of the value from the refinance transaction at the second time.

33. The method of claim 27, wherein the step of determining a value of the predetermined property includes the substep of determining the value based on a value of the predetermined property from a purchase transaction at a second time, different from the first time, and the determining a value of the predetermined property takes into account a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

34. The method of claim 27, wherein the step of determining a value of the predetermined property includes the substep of determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time, and the determining a value of the predetermined property takes into account a transaction type bias arising from the use of the value from the refinance transaction at the second time and a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

35. The method of claim 32, wherein the step of determining the value of the predetermined property includes the substep of estimating using a nonparametric technique the transaction type bias arising from the use of the value from the refinance transaction at the second time.

36. The method of claim 33, wherein the step of determining the value of the predetermined property includes the substep of estimating using a nonparametric technique the transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

37. The method of claim 34, wherein the step of determining the value of the predetermined property includes the substep of estimating using a nonparametric technique at least one of the transaction type bias arising from the use of the value from the refinance transaction at the second time and the transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

38. A system for estimating the value of a real estate property, comprising:

means for accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

means for determining, based on the set of property value data, a time-varying price index indicating a change of the values of the plurality of properties over time, wherein the time-varying price index takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties; and

means for estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

39. The system of claim 38, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

40. The system of claim 38, wherein the different types of transactions include refinance and purchase transactions.

41. The system of claim 38, further comprising:

means for determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

42. The system of claim 38, further comprising:

means for determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

43. A system for estimating the value of a real estate property, comprising:

means for accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

means for determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time; and

means for estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

44. The system of claim 43, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

45. The system of claim 43, further comprising:

means for determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

46. The system of claim 43, further comprising:

means for determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

47. A system for estimating the value of a real estate property, comprising:

means for accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

means for determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time and takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties; and

means for estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

48. The system of claim 47, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

49. The system of claim 47, wherein the different types of transactions include refinance and purchase transactions.

50. The system of claim 47, further comprising:

means for determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

51. The system of claim 47, further comprising:

means for determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

52. An article of manufacture capable of configuring a data processor to estimate the value of a real estate property, the article comprising program code to cause the data processor to perform the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index indicating a change of the values of the plurality of properties over time, wherein the time-varying price index takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties; and

estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

53. The article of manufacture of claim 52, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

54. The article of manufacture of claim 52, wherein the different types of transactions include refinance and purchase transactions.

55. The article of manufacture of claim 52, further causing the data processor to perform the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

56. The article of manufacture of claim 52, further causing the data processor to perform the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

57. An article of manufacture capable of configuring a data processor to estimate the value of a real estate property, the article comprising program code to cause the data processor to perform the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time; and

estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

58. The article of manufacture of claim 57, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

59. The article of manufacture of claim 57, further causing the data processor to perform the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

60. The article of manufacture of claim 57, further causing the data processor to perform the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

61. An article of manufacture capable of configuring a data processor to estimate the value of a real estate property, the article comprising program code to cause the data processor to perform the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time and takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties; and

estimating the value of a real estate property based on the time-varying price index to allow use of the estimated value in evaluating a financial decision related to the real estate property.

62. The article of manufacture of claim 61, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

63. The article of manufacture of claim 61, wherein the different types of transactions include refinance and purchase transactions.

64. The article of manufacture of claim 61, further causing the data processor to perform the step of:

determining a value of a predetermined property for a purchase transaction at a first time based on the time varying price index.

65. The article of manufacture of claim 61, further causing the data processor to perform the step of:

determining a value of a predetermined property for a refinance transaction at a first time based on the time varying price index.

66. A method for use with a real estate property, comprising the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index indicating a change of the values of the plurality of properties over time, wherein the time-varying price index takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties;

estimating the value of a real estate property based on the time-varying price index; and

evaluating a financial decision related to the real estate property based on the estimated value.

67. The method of claim 66, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

68. The method of claim 66, wherein the different types of transactions include refinance and purchase transactions.

74. The method of claim 66, further comprising determining a value of a predetermined property for a purchase transaction at a first time based on the time-varying price index.

75. The method of claim 74, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property from a purchase transaction at a second time, different from the first time.

76. The method of claim 74, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time.

77. The method of claim 76, wherein determining a value of a predetermined property includes taking into account a transaction type bias arising from the use of the value from the refinance transaction at the second time.

78. The method of claim 66, further comprising determining a value of a predetermined property for a refinance transaction at a first time based on the time-varying price index.

79. The method of claim 78, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property form a purchase transaction at a second time, different from the first time.

80. The method of claim 78, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time.

81. The method of claim 79, wherein determining a value of a predetermined property includes determining the value, taking into account a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

82. The method of claim 80, wherein determining a purchase value includes taking into account a transaction type bias arising from the use of the value from the refinance transaction at the second time and a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

69. A method for use with a real estate property, comprising the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time;

estimating the value of a real estate property based on the time-varying price index; and

evaluating a financial decision related to the real estate property based on the estimated value.

70. The method of claim 69, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

83. The method of claim 69, further comprising determining a value of a predetermined property for a purchase transaction at a first time based on the time-varying price index.

84. The method of claim 69, further comprising determining a value of a predetermined property for a refinance transaction at a first time based on the time-varying price index.

85. The method of claim 69, wherein determining a time-varying price index includes estimating the price index using a linear spline function.

86. The method of claim 69, wherein determining a time-varying price index includes estimating the price index using a spline function.

87. The method of claim 86, wherein the spline function includes one or more knot points.

88. The method of claim 87, wherein the placement of the knot points is dynamically determined by the set of property value data corresponding to the plurality of properties.

89. The method of claim 88, further comprising determining a value of a predetermined property for a purchase transaction at a first time based on the time-varying price index.

90. The method of claim 88, further comprising determining a value of a predetermined property for a refinance transaction a first time based on the time-varying price index.

71. A method for use with a real estate property, comprising the steps of:

accessing a set of property value data for a plurality of properties, wherein the property value data corresponds to a transaction involving each of the plurality of properties;

determining, based on the set of property value data, a time-varying price index using a nonparametric technique, wherein the time-varying price index indicates a change of the values of the plurality of properties over time and takes into account a transaction type bias corresponding to different types of transactions involving each of the plurality of properties;

estimating the value of a real estate property based on the time-varying price index; and

evaluating a financial decision related to the real estate property based on the estimated value.

72. The method of claim 71, wherein the property value data corresponds to a refinance transaction or a purchase transaction.

73. The method of claim 71, wherein the different types of transactions include refinance and purchase transactions.

91. The method of claim 71, wherein determining the time-varying price index includes estimating the price index using a spline function.

92. The method of claim 71, wherein determining the time-varying price index includes estimating the price index using a linear spline function.

93. The method of claim 71, wherein determining the time-varying price index includes estimating a transaction type bias between the property value data derived from refinance transactions and the property value data derived from purchase transactions using a nonparametric technique.

94. The method of claim 71, wherein determining the time-varying price index includes estimating a transaction type bias between the property value data derived from refinance transactions and the property value data derived from purchase transactions using a spline function.

95. The method of claim 71, further comprising determining a value of a predetermined property for a purchase transaction at a first time based on the time-varying price index.

96. The method of claim 95, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time, and the determining a value of the predetermined property takes into account a transaction type bias arising from the use of the value from the refinance transaction at the second time.

97. The method of claim 96, wherein determining a value of a predetermined property includes estimating using a nonparametric technique the transaction type bias arising from the use of the value from the refinance transaction at the second time.

98. The method of claim 71, further comprising determining a value of a predetermined property for a refinance transaction at a first time based on the time-varying price index.

99. The method of claim 98, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property from a purchase transaction at a second time, different from the first time, and the determining a value of the predetermined property takes into account a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

100. The method of claim 99, wherein determining the value of the predetermined property includes estimating using a nonparametric technique the transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

101. The method of claim 98, wherein determining a value of a predetermined property includes determining the value based on a value of the predetermined property from a refinance transaction at a second time, different from the first time, and the determining a value of the predetermined property takes into account a transaction type bias arising from the use of the value from the refinance transaction at the second time and a transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.

102. The method of claim 101, wherein determining a value of a predetermined property includes estimating using a nonparametric technique at least one of the transaction type bias arising from the use of the value from the refinance transaction at the second time and the transaction type bias arising from determining the value of the predetermined property for a refinance transaction at the first time.