ISSN 2587-814X (print),
ISSN 2587-8158 (online)

Russian version: ISSN 1998-0663 (print),
ISSN 2587-8166 (online)

Mikhail Laskin 1
  • 1 Saint Petersburg Federal Research Center, Russian Academy of Sciences, 39, 14 line, Vasilevskiy Island, St. Petersburg 199178, Russia

Multidimensional log-normal distribution in real estate appraisals

2020. No. 2 Vol.14. P. 48–63 [issue contents]

      The purpose of the research was to develop a market value appraisal methodology based on a set of a joint logarithmically normal distribution of price-forming factors. Joint logarithmically normal distribution means random vector component logarithms are distributed together jointly normally. This article suggests a method for appraising the real estate market value based on the statistical hypothesis of a joint logarithmically normal distribution and conditional distribution of prices with fixed values of pricing factors. The article suggests a method of offer price analysis from the point of view of its relevance to pricing factor values. We consider the features of the coefficient of development depending on the area of the land plot. Additional arguments are given in favor of estimating market value as a mode of conditional laws of price distribution. An example of a multidimensional log-normal distribution of prices and pricing factors such as the area of the improvements (improvements mean buildings and constructions) area and the land area in real data, i.e. for the case of a three-dimensional random vector. We present a formula for determining the absolute maximum density point of a multidimensional logarithmically normal random vector. The proof is given in the Appendix. The results obtained can be used to create information systems to support decision-making in valuation activities for real estate properties.

Citation: Laskin M.B. (2020) Multidimensional log-normal distribution in real estate appraisals. Business Informatics, vol. 14, no 2, pp. 48–63. DOI: 10.17323/2587-814X.2020.2.48.63
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