Mar 27, 2016
Josh is back and he addresses how regression tools can help, but makes it clear they are not the end all/be all of adjustment support. Listen in as he describes how regression can be a great tool and it does not have to take a lot of time. Two links for items discussed in the podcast.
I appreciate the discussion about regression analysis but the impression I have after listening is that the interview really glosses over a significant issue with multivariate regression.
Confounding is a real problem in real estate. Confounding is when supposedly independent variables (property characteristics) run together. Floor area directly relates to several variables in most markets, such as garage count, bedroom count, bath count, and quality. For example, bigger homes tend to have more bedrooms, more baths, and more garage space/bays. Oftentimes when I run a regression, I get garbage because of confounding.
The podcast really doesn't address this adequately and it's a big issue for residential appraisers.