The Journal of Real Estate Finance and Economics
Volume 32, Issue 1, Article 3 (Abstract)
Title:	How Does Appraisal Smoothing Bias Real Estate Returns Measurement?
Author:	Robert H. Edelstein and Daniel C. Quan
Abstract:	This paper examines and clarifies several related issues about real estate return indexes. Specifically, even if real estate valuation smoothing exists at the individual property level, such errors may offset in the aggregate. Using data from commercial property appraisals and corresponding transactions, appraisal smoothing errors engender an underestimation of both the first and second moments for real estate returns. After correcting for these "underestimations," real estate mean returns and the variance appear to be quite similar to those of stocks.
Keywords:	appraisal smoothing, error aggregation, real estate returns