What Drives Land Prices in Your Market? The Use of Multiple Regression Analysis to Confirm the Significance of Determinative Real Estate Value Elements

Multiple regression analysis (MRA) has proven to be a useful tool to predict selling prices in a mass appraisal context. The significance of determinative value elements – identified by more conventional methods such as sale verification or pairings – can objectively be confirmed or rejected by the practicing appraiser employing MRA. This is demonstrated with the analysis of a small set of sales of rural lots in southeast Alaska. This article aims to: • Demonstrate the strength of MRA to explain rather than to predict selling price or value of real estate in dynamic markets; • Encourage an increased use of regression techniques properly applied by those who are familiar with MRA but do not routinely use statistical methods; and • Show the usefulness of MRA in supporting area market trends, in the selection of comparable sales and in the application of qualitative adjustments for difficult-toquantify property attributes in specific appraisal assignments.