Learning outcomes

In this chapter, you will learn how to

• outline key stages in the construction of econometric models;

• illustrate the principles of model building in real estate;

• explain the relationships and variables researchers most frequently model and forecast in the real estate market;

• broadly categorise quantitative and qualitative forecasting approaches;

• understand the objectives and usage of modelling and forecasting work; and

• compare the characteristics of real estate data with those of economic and financial data;

• you will also become acquainted with the use of econometrics software packages.

The focus of this book is econometric modelling and forecasting in the real estate field. The book tackles key themes in applied quantitative research in real estate and provides the basis for developing forecast models for this market. This chapter sets the scene for the book. It describes the rationale for this text and highlights the business areas in which real estate modelling is important. The econometric study of relationships in real estate and the forecasting process draw upon the general subjects of econometrics and economic forecasting. This chapter also touches on issues relating to the construction of general forecasting models with direct implications for real estate practice.

Motivation for this book

The complexity of the real estate market, its linkages to the economy and the importance of real estate in the credit and investment spheres have necessitated a closer study of the dynamics of the real estate market and the increasing use of quantitative analysis, to explore how adjustments take place within the market and to measure its relationship with the external environment.