UBC Theses and Dissertations

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UBC Theses and Dissertations

Valuation theory and real property assessment Rollo, Gordon Paul


The real property tax has a major impact on real property owners in all Canadian municipalities. As with all systems of taxation it is important that the burden of this tax be distributed fairly and equitably. Legislators have attempted to ensure equitable treatment among real property owners by requiring that the basis of assessment should be 'actual value'. However, due to the large numbers of properties to be valued, assessors have not been able to use the market approach to value, a valuation technique known to produce 'actual values'. Rather, they have resorted to the more subjective cost approach to value. While the mechanics of the cost approach lend themselves to the mass valuation problem, they rarely produce values that can be equated with actual market values. The application of multiple regression analysis is presented as a solution to this valuation problem. Multiple regression analysis enables the assessor to produce objectively the 'actual value' of all single family homes in a municipality. After presenting multiple regression analysis as a modern application of the market approach to value, the applicability of this valuation technique is tested on actual sales data. A sample of approximately four hundred recently sold single family homes is subjected to valuation by multiple regression analysis. Various experiments, including means of stratifying the data are presented in an attempt to produce high standards of solution. While the statistical results of the experiment are not of sufficient calibre for practical assessment purposes, they do reveal how continued experimentation can improve the applicability of this valuation technique to mass appraisal. Multiple regression analysis is the assessor's tool of the future. It facilitates the application of a valuation technique that will permit the assessor to meet his statutory obligation while still allowing him to adhere to sound appraisal methodology.

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