PROPERTY VALUATION

AND APPRAISAL

U.S. INFORMATION
SYSTEMS AND
RECOMMENDATIONS FOR
POLAND

Prepared for Prepared by

Mark Bates
David Dale-Johnson

W.J. Brzeski
Cracow Real Estate Institute
East European Regional Housing Sector Assistance Project
Project 180-0034 The Urban Institute Consortium
U.S. Agency for International Development, ENI/DG/LGUD
Contract No. EPE-C-00-95-001100-00, RFS No. 647

THE URBAN INSTITUTE

2100 M Street, NW
Washington, DC 20037
(202) 833-7200 September 1999
www.urban.org UI Project 06610-647
 TABLE OF CONTENTS

LIST OF ACRONYMS

1.0 INTRODUCTION .......................................................................................................1

2.0 OVERVIEW OF US DATABASES AND INFORMATION SYSTEMS ........................2

2.1 The Use of Data by Appraisers, Brokers, Banks and Regulators .........................3
Single Family Residential: ........................................................................................3
Commercial Properties: ............................................................................................4
2.2 How the Data are Gathered, Processed and Made Available...............................5
Property Sales Data .................................................................................................8
Construction Cost Data ..........................................................................................10
Rental Income and Expense Data..........................................................................11
Capitalization Rates and Rates of Return...............................................................11
2.3 The Payment Structure Supporting the Information Systems...............................11
Single Family Residential Data:..............................................................................12
Commercial Property Data: ....................................................................................12

3.0 CRITIQUE OF THE ADEQUACY OF U.S. DATABASES AND INFORMATION

SYSTEMS IN U.S. APPRAISAL PRACTICES...............................................................12
3.1 A Critique of National and Regional Macroeconomic Data in the U.S.................13
3.2 Single Family Residential Price Data in the U.S. ................................................14
3.3 Commercial Property Price, Income and Cap Rate in the U.S............................16
Property Revenue and Expense Information:.........................................................16

4.0 AN OVERVIEW OF APPRAISAL INFORMATION IN POLAND AND PRELIMINARY

RECOMMENDATIONS .................................................................................................18
4.1 Public Cadastres.................................................................................................19
4.2 National and Regional Macroeconomic Data......................................................21
Recommendations .....................................................................................................21
4.3 Residential Data .................................................................................................22
Recommendations .....................................................................................................22
4.4 Commercial Data: Property Price, Income, Expenses and Cap Rate .................23
Recommendations .....................................................................................................24
4.5 Further General Comments: The Public Sector, the Real Estate Professions and
the Banks’ Role in Information Provision....................................................................25

APPENDIX I
Real Estate Trade Associations
APPENDIX II
U.S. Real Estate Research Centers/Web Site Addresses
APPENDIX III
U.S. Real Estate Data Sources
LIST OF ACRONYMS

AVM Automated Valuation Model

BOMA Building Owners and Managers Association

CMBS Commercial mortgage-backed securities

GIS Geographic Information System

GUS Central Office of Statistics

IREM Institute of Real Estate Management

MLS Multiple Listing Service

US United States
 ABSTRACT

Real estate appraisals can provide current market value estimates to support
multiple purposes, including purchase or sale, financing and related underwriting,
property listing, assessment for tax purposes, and value at transfer (inheritance or gift).
Readily available real estate data facilitates more accurate appraisals, allowing real
estate risk to be more precisely assessed by buyers, lenders (primary and secondary),
and regulatory authorities.

Three appraisal methodologies are standard for U.S. appraisers and for most
appraisers worldwide, including those in Poland:
• Sales comparison: The value indicated by recent sales of comparable property in the
market.
• Income: The value of a property’s earning power based on the capitalization of its
income.
• Cost: The current cost of reproducing or replacing the property, plus improvements,
minus the loss in value from depreciation, plus site value.

The reliability of the final estimate of value, however, is intimately tied to the
reliability of the data. In the U.S., the real estate valuation process typically begins with
a broad overview of market forces using general data, continues with an analysis of
regional and local market conditions, and ends with an analysis of specific data
applicable to a particular property or properties. In most geographic locations, for most
types of property, extensive data are available, both public and private, and the
available data are generally able to support the chosen valuation methodologies. This
is not the case in Poland nor in the transition countries in general, since under the state-
dominated real estate sector, a valuation process, as used in market-based
transactions, did not exist. Thus, Poland now needs to establish the relevant data
series and build the corresponding databases.

This paper reviews the residential and commercial appraisal process in the
United States, describes the databases that support them, and discusses the particular
roles of the public and private sectors in making data available. It identifies the general
macroeconomic data (national and regional) and the property-specific data needed if
appraisals are to accurately assess both value and potential risks. It surveys the
strengths and weaknesses of the current U.S. and Polish systems, and points out that,
though Polish appraisers understand and use all three appraisal methodologies, an
engineering tradition that focuses on physical attributes, combined with lack of market
transactions and income data, may lead them to emphasize the cost approach. In
addition, the Central Bank, it its role as regulator of mortgage banks now being
established in Poland, must determine the rules underlying the concept of
“mortgageable value” for the underlying collateral of mortgage bonds. Thus, a unique
opportunity exists in Poland to develop a system of collection and distribution of real
estate data based on current international best practice, and the paper makes general
recommendations as to the components of such a system and how it might best be
developed in Polish circumstances.
 PROPERTY VALUATION AND APPRAISAL

U.S. INFORMATION SYSTEMS AND RECOMMENDATIONS FOR POLAND

1.0 INTRODUCTION

The output of the appraisal process in the U.S., is typically a current market value
of an individual real estate asset or group of assets. This valuation can provide
information to support multiple purposes, including:

— Purchase or sale
— Financing and related underwriting
— Property listing
— Assessment for tax purposes
— Value at transfer (inheritance or gift)

The ability of individual actors in an economy to accurately determine the market

value of a real estate asset is a critical variable in order to avoid catastrophic losses in
real estate property and capital markets.

In the world of real estate, it is not always possible to make a precise estimate of
market value. More information allows investors to more accurately assess risk and
make informed decisions. This results in more efficient allocation of capital among
competing investment alternatives. For example, to recognize value real estate assets
permits corporate owners of real estate the recognition of opportunity costs associated
with under-utilized assets and ultimately re-deploy capital to more productive uses. For
lenders, the ability to accurately value real estate collateral permits underwriters to allow
higher loan-to-value ratios. The existence of a transparent valuation process also allows
for development of secondary mortgage markets, as the information contained in an
appraisal permits subsequent investors in a loan to assess critical areas of the original
underwriting procedure. Readily available real estate data generally results in more
accurate appraisals, allowing real estate risk to be more precisely assessed by buyers,
lenders (primary and secondary), and regulatory authorities.

Section 2.0 provides an overview of appraisal information systems in the U.S.,

including national, regional, and local data describing macroeconomic and market
trends and specific local data germane to the appraisal of residential and commercial
properties. Section 3.0 critiques the U.S. system and amplifies some of its key
shortcomings.

Section 4.0 comments on the current situation in Poland with regard to the
appraisal process and availability of data and offered initial recommendations designed
to move toward an improved system. Appendices I to III provide, respectively, a list of
real estate trade associations, real estate research centers, and a comprehensive listing
 East European Regional
2 Housing Sector Assistance Project

of real estate data sources used in appraisal in the U.S. This listing, provides an
overview of the involvement of both private companies and public agencies in data
provision.

2.0 OVERVIEW OF US DATABASES AND INFORMATION SYSTEMS

The analysis of real estate data begins with an investigation of market trends at
all market levels - international, national, regional, community and neighborhood. The
examination of these different levels of data helps the appraiser to understand the
interrelationships among the principles, forces, and factors that affect real property
value. This report is written to assist Poland in developing data systems appropriate to
support internationally recognized valuation procedures. Like Polish appraisers, U.S.
appraisers utilize the same three methodologies that are standard for most appraisers
worldwide:

— Sales comparison approach—The value indicated by recent sales of

comparable property in the market.

— Income approach—The value of a property's earning power based on the

capitalization of its income.

— Cost approach—The current cost of reproducing or replacing the property,

plus improvements, minus the loss in value from depreciation, plus site value.

Each approach requires the gathering and analysis of sales, cost and income
data that pertain to the property being appraised. The reliability of the final estimate of
value in an appraisal is intimately tied to the reliability of the data. Real estate markets
tend to be heterogeneous. Markets and sub-markets have different patterns of price
movement within the confines of regional and national economic conditions. It therefore
requires substantial resources to track market conditions within a large geographic area,
such as the U.S. national market, regional markets, and innumerable sub-markets.

Real estate market information can be loosely categorized as general data and
specific data. The real estate valuation process typically begins with a broad overview of
market forces using general data, continues with an analysis of regional and local
market conditions, and end with an analysis of specific data applicable to a subject
property.

General socio-economic data include information on social, economic,

governmental, and environmental forces that affect property value. General data also
include real estate data indices made available from a variety of sources. The
understanding and analysis of the general economic data forms the basis for proper
interpretation of the interaction of market forces that ultimately influences property
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 3

value. Users of general data must understand the economic conditions and trends to
properly analyze a specific property. A list of economic and real estate data sources
(“U.S. Real Estate Data Sources”) has been compiled and included in Appendix III of
this report.

At state and local levels, building and planning agencies/departments can

provide data on population, households, master plans, zoning, building permits, etc.
This type of general data is useful in supply and demand projections. There is no
consistency in the format or availability of state and local data. It may be compiled and
readily available in published and/or electronic format, or non-existent, depending on
local/state budget and staffing constraints.

Real estate trade associations can also be useful sources for information. These
organizations publish topic- specific and general real estate data and market analysis.
An alphabetical list of real estate-related professional organizations is included in
Appendix I.

Specific data consists of details relating to the property being appraised,

comparable sales, cost data, comparable property income and expense information and
rates of return. Reliable data is necessary to make meaningful comparisons to a specific
property.

2.1 The Use of Data by Appraisers, Brokers, Banks and Regulators

Single Family Residential

Brokers use comparable transactional data for determining listing or bid price for
a subject property and for undertaking ad hoc valuation (often for the same purpose—
determining listing or bid prices). Appraisers use the same data for more formal
valuation exercises for numerous purposes, including financing (third party appraisals
are required by lenders), litigation, property assessment appeals, estate settlement and
so on. Clearly, the validity of the final estimate of market value is quite dependent on the
quantity and quality of the market data used in the analysis. Specific market data is
required in all three traditional approaches to value.

Banks and regulators use data in a number of ways. First, the data are used
indirectly, in that regulators require third party appraisals as part of the loan underwriting
process. Also the data may be used directly in several ways. Lenders are usually
required to undertake an internal asset review annually. This means that lenders must
assess collateral values to be certain that the bank’s capital is not at risk. For single
family homes, this is usually done at an aggregate level. That is, lenders may use prices
indexes derived from the above data to determine changes in collateral value not by
individual property, but rather by region or market area. If an individual asset becomes
non-performing (i.e., the borrower fails to make three consecutive payments and is over
 East European Regional
4 Housing Sector Assistance Project

90 days in arrears), then the loan will be reviewed more often. In this case, internal bank
policy will determine how the collateral valuation is undertaken. Often, non-performing
pools will involve the use of “broker price opinions” and/or more sophisticated statistical
techniques (see below).

Neighborhood or regional price indexes are usually used to adjust collateral

values on a mortgage pool basis to determine whether price changes imply the need for
further reserves. These adjustments usually occur on an annual basis. Typically,
specific property, periodic appraisal updates are not required for performing residential
loans over the loan term.

Commercial Properties

Real estate brokers typically use comparable data (lease rates, sales prices of
properties - land, land and improvements) for the purpose of establishing values of
properties for listing purposes. Most brokers have access to the same local information
that appraisers do, but since they are parties to the transaction and are aligned with a
buyer, seller, landlord or tenant, they are not normally called upon to provide
independent estimates of value of property or lease transactions.

Banks require third party appraisals when a loan is underwritten. Appraisers

performing appraisals for federally related transactions must be licensed and certified
(by the state in the U.S.) and abide by the Uniform Standards of Professional Appraisal
Practice1 and specific bank appraisal guidelines. Once a loan is originated, periodic
asset review may require access to comparable sales data or leasing information. For
example, a typical federally regulated institution will require that commercial borrowers
submit financial information on both the property and the borrowing entity’s financial
situation on an annual basis. The submission of such information is usually contractually
required and failure to provide the information may constitute a default on the part of the
borrower.

In a secondary mortgage market (defined to include securitization and the sale of

loans), the ability of third parties to evaluate financial contracts (terms, conditions and
collateral) is critical. Loans are often acquired, pooled and then securitized by
intermediaries who did not originate the loans. This activity can only occur if the
transactions are transparent2.
1
Published by the Appraisal Foundation as authorized by Congress as the source of appraisal standards
and appraiser qualifications.
2
Types of multivariate methodologies used to adjust for differences among comparables vary according
to whether the data are for single family residences or commercial properties.
Services such as Mortgage Risk Assessment Corporation and Case Shiller Weiss, Inc. provide on-line
access to existing home transactions data which can be used in hedonic models for estimating the price of a
subject property. Appraisal of single properties is usually undertaken by professionals who manually adjust
prices of comparables to arrive at an estimate of value for the subject. Hedonic techniques are more commonly
used in either mass assessment modeling or for valuation of collateral in loan pools. In either of the latter
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 5

Since commercial properties are usually not homogeneous, lenders will require,
as a matter of policy and procedure, that the borrowers provide periodic (annual)
updates of property level income and expense data as well as information on financial
condition. This information, combined with market data from third parties, will permit
lenders to undertake ‘desk-top’ appraisals of collateral for existing commercial loans. In
cases where large value changes are likely or when property conditions or attributes
change, an updated third party appraisal may be required. An appraisal is also usually
performed when a loan is in default. Federal regulators required appraisal updates on
commercial collateral during the U.S. banking crisis in the 1980s and early 1990s, with a
concentrated effort in the Southwest and Northeast. This had a great impact on the
appraisal community, resulting in a windfall of new business, substantially higher fees
and a shortage of qualified appraisers. The restriction of new and rollover loan capital
resulted in property prices plummeting, distressed sales (i.e., distressed comparable
prices), lower appraised values and an increase in performing/non-performing loans3.
Prices and appraised values spiraled downward and many banks were forced to close
or merge with a stronger institution.

2.2 How the Data are Gathered, Processed and Made Available

The types of data collected by federal, state, regional and local governments are
extensive and numerous. Most commonly, these data begin with the agency or entity
that has a practical purpose for collecting them. For example, local planning
departments, as a matter of course, keep track of the number and value of building
permits issued per period in the jurisdiction. Usually, these data are free and their
availability depends on the form in which they are maintained and the willingness and
budget of the agency or government entity involved.

The most common collector of transactional data is the state, county or local
property tax jurisdiction. Often transactional data are critical for assessment purposes. It
is usually required that the seller, the buyer, the lender or the appraiser submits these
data at the time of sale. Sale prices are often recorded in the registry of deeds as either
the actual dollar amount of the transaction or as a percentage of the price in the form of
transfer taxes.

cases, multiple properties must be valued (usually quickly) at low cost on a per unit basis. Repeat sales
indexes are used for the same purpose. Choice of methodology is usually the result of the preference of the
user or data availability (repeat sales indexes may be difficult to generate for markets in which there are limited
numbers of transactions).
Entities such as Torto-Wheaton CB Commercial and Property & Portfolio Research are involved in using
econometric techniques to predict rents and vacancy rates for major metropolitan areas across the country.
Usually these models and predictions play a role in valuation exercises undertaken by more sophisticated
entities such as real estate research departments in larger lending institutions and real estate portfolio advisors.
3
A typical performing/non-performing loan is one where the payments are current (performing) but L/V
ratios are in non compliance.
 East European Regional
6 Housing Sector Assistance Project

Private firms maintain data for various purposes. Usually, the underlying bases
for private data sets are the public data sets often maintained by the property tax
authority. Private firms acquire data from the local property tax authority and sometimes
clean or augment the data and, in turn, provide the data on-line to private subscribers.
The data sets normally include for each property the transaction price, date of closing of
the sale, name and address of buyer and seller and other variables describing the
property. The descriptive information is fairly complete for single family homes but
usually inadequate for commercial properties; thus, the data must be augmented in the
case of commercial properties. The most common subscribers to these services are
appraisers, lenders, and real estate brokers. These on-line services are typically used
for valuing property on a single transaction basis. In other words, at the time of a listing
or a sale and subsequent financing, on-line data sets would be used to identify
comparable transactions in the neighborhood of the sale. Private providers often check
and enhance the quality of the data or, at least, facilitate ease of access by the user.

In most areas of the U.S., access to property records, which are public data and
fall under the freedom of information guidelines, are free. Copies of deeds, field cards,
and lot plans usually require a small fee for use of the copy machine. Some
jurisdictions provide the data free on web sites. Some private data providers collect and
organize the data and sell it on a subscription basis. Also, third party subscription
services are available.

Recently, many properties have been appraised using these data sets. The
typical application is the valuation of collateral for a geographically diverse mortgage
portfolio. Therefore, breadth (geographic diversity) of coverage has become important.
Speed and economy are also important. Large numbers of properties, which individually
are collateral for separate residential mortgages, must be valued during a short time
and at minimal cost (less than $25 per property). The researchers4 are interested in
quick, reasonably accurate, unbiased estimates of collateral value. These data sets
allow collateral valuation without site visits, which radically reduces the time and cost of
the valuation process. Often the user will augment the data analysis with a broker’s site
visit for the purpose of assuring that the property has not been physically damaged and
that the physical description matches documentation data.

Unfortunately, the type of data discussed above refers primarily to the types of
data available for single-family homes and small, multi family properties (2 to 4 units).
Since commercial properties are relatively heterogeneous and data that would permit
computerized valuation of multiple properties are not easily available. Both property
price and income information are necessary for a meaningful appraisal of investment
real estate. Since lease terms are private information in the U.S., part of the equation is
missing for the valuation of investment properties by parties other than those having

4
Researchers include statisticians, appraisers acting as portfolio advisors, market analysts, etc.
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 7

access to private information (e.g., direct lenders, appraisers directly involved in the
transaction, brokers, etc.).

General economic and market data are typically compiled and disseminated by
federal, state and local government agencies, trade associations, universities and
private data vendors. The largest resource for general economic data comes from the
federal government. Reports are available with much of the collected data on the
Internet. A sampling of Federal Government data is shown in Table 1. A more complete
listing is shown in Appendix III of the report.

Table 1
Examples of US Government Housing Data
Agency Publication Data
The Economic Report of the Housing, housing starts and
Council of Economic Advisors President financing statistics
Federal Reserve Bulletin GNP, GDP, housing,
Federal Reserve construction, mortgages
Department of Commerce Census of Housing
Department of Commerce Annual Housing Survey
Department of Commerce Survey of Current Business Value of new construction
Housing and Urban Development report Housing starts, vacancy surveys
Development

Many professional real estate organizations publish quarterly, semi-annual

and/or annual reports on a variety of real estate market segments and statistics. These
reports are available to organization members for free. A small fee is charged for non-
members. A sampling of periodic reports published by various organizations is shown in
Table 2.

Table 2
Examples of Data Published by Real Estate Organizations
Organization Report Description
Building Owners and Managers Association Income/expense analysis for office buildings

International Council of Shopping Centers Factory outlet index, monthly mall merchandise
index. Handbook on shopping center operations,
revenues and expenditures. Indexes track sales
activity for factory outlet shopping centers and
regional malls.

National Association of Industrial and Office Industrial income and expense report
Properties

Society of Industrial and Office Realtors Industrial real estate market survey, review and
 East European Regional
8 Housing Sector Assistance Project

forecast
Urban Land Institute (ULI) ULI market profiles

Universities and colleges sponsor real estate research departments and offer
copies of research publications for a small fee. The publications usually address local
real estate issues such as growth and land use patterns. Several universities publish
price indices. The University of Connecticut Center for Real Estate and Urban Economic
Studies offers on-line residential price indices for Connecticut. (Prominent real estate
research centers in the U.S., are listed in Appendix II).

Databases and research publications have become increasingly available on-line

and on CD-ROM in recent years. The data sources include a broad range of topics
including housing inventory, vacancies, demolitions and conversions, commercial
construction, zoning regulations, demographics and housing forecasts. General data is
also cumulative and an integral part of an appraiser's office files.

Specific types of data are made available by a variety of public and private
sources.

Property Sales Data

Comparable sales data comes from a variety of sources including public records,
published news, real estate professionals, multiple listing services and private data
vendors:

n Public Records. Public property records (deeds) are most often recorded and
made available at municipal or county registrar offices. The information in the deed
typically includes the full names of the parties involved in the transaction, the
transaction date, a legal description of the property, the property rights conveyed,
easements and restrictions on the property and, in some cases, the consideration paid
for the property rights. Sale price recording practice varies from state to state. Some
states require the true and actual price paid either to be reported as an actual dollar
amount or recorded as an amount of tax (“transfer stamps”) based on the sale price
(“price disclosure”). Other states do not require the disclosure of sale price for real
estate (non-disclosure states). Appraisers working in these jurisdictions must obtain
sale price data from other sources. Other sources include public (media)
announcements, real estate brokers, informal and formal data sharing arrangements
between appraisal offices in local markets, lenders, and private data vendors. Specific
price data in non-disclosure jurisdictions typically come from parties involved in the
transactions. Appraisers and tax assessors often use a variety of combinations of price
information sources, depending on availability in a given market.
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 9

nPublished News. City newspapers and trade publications typically report news
on property transactions. Although the information may be incomplete (or inaccurate), it
is a good lead source for sales data. A typical trade newspaper such as the New
England Real Estate Journal is published biweekly and the subscription price is $99 per
year.

n Real Estate Professionals. Real estate appraisers, agents, managers and

mortgage bankers can often provide transaction data and data leads.

n Multiple Listing Services. Multiple listing services (MLS) are the primary
source for comparable sales data for residential real estate appraisers. The annual cost
to subscribe to a multiple listing service, which requires a National Association of
Realtors membership, starts at approximately $750 and increases depending on the
size of the real estate firm. In most urban and suburban markets, multiple listing
services publish real estate listings and sale data in both hard copy and electronic form.
Most multiple listing services serve the residential market; however, some services
include commercial and investment divisions. A typical multiple listing service may
participate in 65 to 75 percent of all single family sales activities, whereas commercial
and industrial sales activity participation may be only 10 to 15 percent.

n Residential multiple listing books are published biweekly or monthly. A

property listing includes descriptive information, a photo, and the asking price.
Supplemental data include a list of properties put into agreement between buyer and
seller or sold since the last publication as well as sales and listing data. Many multiple
listing services publish quarterly volumes listing properties sold, including the final sale
price and sale date.

n Electronic Data Interchange (EDI). Electronic data interchange was

developed by the National Data Service Work Group to allow the electronic exchange of
information between parties using standardized data formats. EDI was created to
streamline the residential mortgage process. Appraisal data is electronically entered in a
standardized format by the appraiser, which is then sent to a residential property
database.

n Secondary mortgage market agencies. (Fannie Mae and Freddie Mac, the
Federal Home Loan Mortgage Corporation) have mandates to standardize electronic
information in order to facilitate the mortgage lending process. However, the pooled
data are not yet available to the independent appraiser.

n Private Data Vendors. Many appraisers have developed private data vending
services. These services typically cover a specific geographic area, such as a county or
state. The type and level of detail of the data vary. Most comparable sales data services
provide basic transfer information, including property address, buyer, seller, date of
sale, price and index (book and page). The data usually include all recorded
 East European Regional
10 Housing Sector Assistance Project

transactions (residential, commercial, industrial, land, etc.) without property use

categories. The annual cost for an area the size of Rhode Island (population 1 million) is
$370 per year (from the vendor County Comps). Masscomp is a private data vendor
serving the State of Massachusetts. Its data are more comprehensive than County
Comps, providing not only the basic recording (deed) data, but also property use
categories, land size, building size, and the assessor’s map and lot designations. The
typical annual fee is $1,500. A similar service, available in Connecticut, requires an
annual fee of $960. Several companies provide comprehensive non-residential data in
the primary commercial U.S. markets with annual subscription rates exceeding $10,000.
There have been several attempts by private companies and professional organizations
over the past decade to organize a subscription-based national commercial real estate
database. The Appraisal Institute has recently announced funding to continue the quest.
Basic impediments include the cost to develop and maintain the system, lack of interest
of targeted data sources (appraisers5 and assessors), lack of standardized reporting
formats and the proprietary nature of real estate transactional data.

Generally, the availability of real estate data is directly related to the amount of
market activity in a given area. Where markets have been active, usually in major
metropolitan areas, private companies have developed which specialize in providing
real estate data. Less active areas may have no private data service available.
Standardization of industry-wide data reporting has not evolved, with the exception of
EDI noted above. Traditionally, real estate industry participants have been oriented
toward a single geographical region, seldom larger than a Metropolitan Statistical Area
(MSA). As a result, data gathering systems have focused on individual markets and
sub-markets. In addition, property ownership records are typically maintained at a
county or municipal level. Therefore, for both jurisdictional and business reasons, the
result has been a parochial, sub-market approach to the collection and re-distribution of
real estate transaction data.

Construction Cost Data

Construction cost data can be obtained from a variety of sources. Builders and
building material suppliers can often provide cost data on buildings recently constructed
that are similar to the property being appraised. Most engineering firms provide cost
estimating services. Most appraisers rely on manuals published by cost estimating
services such as Marshall Valuation Service and E. H. Boeckh. Published cost manuals
and electronic databases are updated periodically and indexes are provided to adjust to
current costs and locational differences. Annual subscription fees are approximately
$200.

5
Although appraisers would be the prime beneficiaries of the data, many confine their practice to a local
geographic area and have no need for “national” data.
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 11

Rental Income and Expense Data

Rental income and expense data are usually difficult to obtain. A majority of
leases are not recorded and income and expense data are considered proprietary by
property owners or managers. In certain cities, abstracts of recorded leases are
published by private data services. Typically, an appraiser collects and maintains
income and expense data from income producing properties being appraised, for re-use
in future appraisals of similar property types. Some professional organizations publish
income and expense rates, ratios, and averages based on member input, but the data is
not specific to a particular submarket and is typically used for benchmark comparisons
and cost-trend analysis.

Capitalization Rates and Rates of Return

A capitalization rate is a relationship between net income and capital value. An

“extracted” rate, or “going-in” rate, is typically determined by dividing the net income on
the date of sale by the sale price. Although the sale price may be public information, the
net income generally is not. Appraisers extract capitalization rates from appraised
properties that have just recently sold and for which income and expense data were
provided as part of the appraisal process. Extracted capitalization data are supported by
published real estate investor surveys, which provide rate indices. Real estate investor
surveys are funded by subscription income and typically published by private
companies. The Korpacz Real Estate Investor Survey is an example. The subscription
rate is $225 per year. It was developed by a regional appraiser to supplement fee
appraisal income. It is published quarterly and distributed nationally. Survey participants
include pension fund real estate advisors, Real Estate Investment Trust officers,
nationally recognized appraisers6 and real estate portfolio managers involved with
institutional grade properties7. The participants complete a survey form each quarter
which includes questions pertaining to local and regional market conditions, current
criteria for real estate purchases and sales such as yield requirements, income and
expense growth assumptions, capitalization rate requirements, etc. The responses are
disaggregated by property type (retail, office, hotel, and industrial) and regional
(geographic) categories. Appraisers use the published data as benchmarks, adjusting
for local market conditions and property type (institutional vs. non-institutional grade
property).

2.3 The Payment Structure Supporting the Information Systems

A variety of information systems are supported by public and private entities.

Substantial government resources are required to collect and maintain general
6
Typically affiliated with a national or multi-national corporation.
7
Institutional grade property is loosely defined as that which would be purchased and held in a national
investor’s portfolio. Typical examples include central business district office buildings, modern business parks,
high profile hotels, and regional malls.
 East European Regional
12 Housing Sector Assistance Project

economic data. Federal government agencies including the Departments of Labor,

Housing and Urban Development, Commerce, and the Census Bureau all participate in
the collection, maintenance and publication of economic data related to real estate
markets. State governments supplement related federal activities through economic
development agencies, housing agencies, and departments of community affairs.
Private real estate and professional organizations which publish data are funded by
membership dues and typically provide publications free of charge to their membership.
They may charge a subscription fee or one-time charge for specific data requests from
non-members. Private data vendors profit through “per item” and subscription sales to
appraisers, lenders, property managers, etc.

Single Family Residential Data

The primary provider of residential transactional data are Realtor Multiple Listing
Services (MLS)8, as noted above. Real estate brokers generally are “dues-paying”
members of a local realtor organization which provides a Multiple Listing Service. The
MLS is typically a separate organization, but an affiliated, self-supporting entity related
to the local realtor organization. As part of the organization membership agreement, the
broker provides detailed descriptions of listed properties to the MLS for publication and
use by its members. The data are provided in hard copy and, most often, also in
electronic format. The MLS is funded by subscription fees. The data are used by
brokers, appraisers, bankers and regulators.

Commercial Property Data

Most commercial property transactional data is compiled and resold by private

vendors either on a subscription or per item basis. The service is typically regional in
scope and the data are not audited. Several attempts have been made to collect and
distribute commercial sales data on a national scale in the primary commercial markets
in the U.S., but with only moderate success. Many appraisers share collected data with
other appraisers across the country as an informal professional courtesy. There is no
primary provider of commercial transactional data similar to the residential MLS system.

3.0 CRITIQUE OF THE ADEQUACY OF U.S. DATABASES AND INFORMATION

SYSTEMS IN U.S. APPRAISAL PRACTICES

Introduction

Clearly, extensive data and data analysis are at the heart of an adequate real
estate appraisal process. A major and positive trend in the U.S. is that as technology
continues to lower the costs of data collection, storage and dissemination, both the

8
Realtor refers to state realtor organizations under the umbrella of the National Association of Realtors.
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 13

quantity and quality of data available for real estate appraisers in the U.S. have
improved. Data from both the public and private sectors are becoming more readily
available. The major flaws in the U.S. system are the limited consistency in data
collection procedures, reporting formats and calculation methodologies for specific
property data. Nor is terminology consistent. There are also abundant sources of data
that remain untapped in mortgage lending files. The residential mortgage industry is
now in the process of setting standards and capturing transactional data. As meaningful
data becomes more accessible and affordable through technological advances in the
U.S., real estate markets will become more transparent, which should allow more
efficient and accurate pricing. This section provides a critique of U.S. data collection
procedures by type of data.

3.1 A Critique of National and Regional Macroeconomic Data in the U.S.

National macroeconomic data are readily available in the U.S. from a variety of
federal sources through print and digital (Internet) media. However, macroeconomic
data which are necessary to support regional and local economic analyses that provide
the necessary context for a meaningful local market analysis may or may not be
available, depending on the jurisdiction. Much nationally available data are available
disaggregated for larger metropolitan areas, usually indexed by census tract and/or
MSA (Metropolitan Statistical Area). Regional or local data are not normally
standardized, nor are their methods of collection consistent. Usually, appraisers can find
the sources needed, but regional variation in who produces and maintains the data
often make the process of data identification and collection unnecessarily time-
consuming and expensive.

Although the U.S. Census Bureau collects and publishes demographic, economic
and housing data down to the census tract and block group level, it is compiled by
census only once every ten years and thus quickly becomes out of date. There are
private companies that update and market revised data annually based on economic
and demographic reports compiled at the regional and local government level. The data
are useful for real estate analysis only to identify broad-based trends, not neighborhood
or site specific changes.

Although, as noted, macroeconomic data is readily available in the U.S., it is

scattered among a plethora of federal, state and local authorities and must be
independently collected and reassembled by appraisers and real estate market
researchers. Private enterprise is beginning to develop systems of collection and
redistribution sold on a subscription basis, but usually the data is processed and
privately held within practicing real estate-related enterprises. Technological advances
and the internet will likely result in the development of easily accessible, consolidated
macroeconomic data sources for incorporation in real estate price analysis in the near
future.
 East European Regional
14 Housing Sector Assistance Project

Finally, Geographic Information System (GIS) is being adopted in the U.S. by

various public agencies and private firms. However, it is not widely employed. Lenders
are, however, required to geo-code their loans, and there are various services that
undertake that function as a line of business. Lenders must match loans to census
tracts in order to facilitate assessment of fair (non-discriminatory) lending practices.
Unfortunately, more general adoption of GIS techniques to examine spatial aspects of
real estate market activity is occurring at a slow pace, reflecting the cost of the
technology, the training required, and the up-front commitment of time to geo-code
information.

3.2 Single Family Residential Price Data in the U.S.

In the last five years, rating agencies’, issuers’ and investors’ demand for and the
availability of on-line databases for single family home sales that can be used for
valuation has increased dramatically. In fact, this activity has become an industry in and
of itself. The models that the firms develop are termed “automated valuation models”
(AVMs) and employ both hedonic and repeat sales index methodologies. In general,
these data sets are valuable and complete. Currently, most mortgagors still require a
third party appraisal for each transaction, but those loans deemed low risk might allow
for an exterior inspection only and less in-depth comparable sale analysis. AVMs are
still untested as a replacement for third party appraisals, but the trend is moving in that
direction. The biggest drawback is that not all geographic areas have full coverage.
Most services indicate that less than 50 percent of nationwide transactions are included
in their data sets. On the other hand, the transactions included tend to be in the larger
metropolitan areas in markets where loans are easily securitized and there is demand
for information about collateral. In rural areas and smaller communities there is less
demand for information, as large national lenders, investors, and issuers will not
typically target origination or investment in loans in these areas.

Relatively few descriptive variables comprise these data sets. Fortunately, most
of the variability in price is captured in six or fewer variables including, for example,
square feet of living area, age of structure, number of rooms, number of bedrooms,
number of baths, fireplace, and lot size. Cross-sectional hedonic regression models are
used to predict sale prices, and/or repeat sales indexes are used to adjust the prior
sales price of a property to current value. Sometimes this approach requires further
adjustment if there is evidence of changes in property attributes. Research in the U.S.
suggests that within a region there can be fairly dramatic differences in property price
changes and the process tends to homogenize neighborhood price differentials. One of
the primary drawbacks is the inability to effectively quantify neighborhood boundaries as
they relate to price. It is not unusual to have price variances of over 50 percent within
the same census tract or even block group in older, urban residential areas. Tracking
demographic changes as they relate to property price has yet to be mastered by
proponents of AVM technology.
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 15

Generating repeat sales indexes requires the ability to identify properties that
have been sold repeatedly over time. When price indexes are used, it is important to be
able to distinguish sales in relatively small (localized) geographic areas. A primary
drawback with repeat sale indexes is the inaccurate accounting for building
changes/improvements between sale dates.

This data is usually provided in the first instance by public agencies (e.g.,
property taxing authorities) which collect the data regularly from property title records9
and physical inspections. They maintain its accuracy to carry out their administrative
mission (for example, periodic assessment of properties and determination of property
tax liability). Since property taxation is a state or local responsibility in the U.S., there is
significant intra-state variation in the availability, timeliness and cost of transactional
data that is collected for property assessment purposes.10

As noted, the Multiple Listing Services (MLS)11 are usually associated with the
realtor organization in an urban area. Many federal and local government agencies rely
on MLS data to track single family housing trends in some serviced areas. MLS services
are usually operated by realtor associations in a particular city or urban area.
Unfortunately, there is no national point of collection or clearinghouse to standardize
and consolidate the independent databases. Moreover, not all sales are handled
through brokers. For example, private sales (sales by owner) are normally not included
in MLS data sets.

Cost data provided by national cost data services are useful to test the
reasonableness of actual project costs. However, they do not allow for consideration of
specific site cost overruns (due to unfavorable site conditions such as ledge, wetlands,
uneven grade, etc.); temporary, local material price spikes; custom construction; and
other conditions. Due to the reliability and availability of residential comparable sale
data, the cost approach in the appraisal process is typically relied upon less in the
reconciliation of the three approaches to value to obtain a final opinion of market value.

Due to the aggregate size of the U.S. residential mortgage market, the focus for
developing efficient access to price related data has been primarily in the single family
residential sector. The driving force has been from secondary mortgage market
participants, primarily Fannie Mae and Freddie Mac. Their vision is to allow a mortgage
applicant to apply for, and close, a mortgage loan within 1-3 days. Part of this vision
includes access to rapid, low cost property value estimates. AVMs are the chosen
vehicle, but issues such as tracking shifts in price related to local demographic changes,
the introduction of negative neighborhood influences, sale price confirmation and non-

9
See disclosure/non-disclosure discussion in Section 2.1, Property Sales Data, Public Records.
10
It is common practice in full disclosure jurisdiction for tax authorities to collect transactional price data
from title registries for property assessment purposes.
11
See Section 2.1, Property Sales Data, Multiple Listing Services.
 East European Regional
16 Housing Sector Assistance Project

standardized micro data sets will continue to challenge the reliability of market value
estimates.

3.3 Commercial Property Price, Income and Cap Rate in the U.S.

Jurisdictions (title registries) that record transaction prices for single family
residential sales also typically record price information regarding commercial properties.
Unfortunately, because of the heterogeneity of commercial properties, the data from a
single transaction are not very useful unless income and other descriptive data are
available. Thus, the effective use of commercial price data involves piecing together
data from several sources.

Price data and descriptive information. Price data, in the first instance, will be
available from public sources and serve as a check on the accuracy of vendors’ private
data that provide more detailed information. Private vendors (such as Comps, Inc.)
provide descriptions of improvements, site area and measurements, zoning, other
publicly available data, and photographs, in addition to the sale price of each
comparable property. Their online software permits users to (geographically) define
market areas from which to draw comparable sales. Unfortunately, this company
services only urban areas and only in 22 of the 50 states. Other competitors exist in the
most populous markets and appraisal firms maintain their own databases for this
purpose. These private companies began providing a service to the appraisal industry
and thus data are now used by lenders, brokers and many other professionals as a
dependable source of transactional information on commercial properties, including
land.

Attempts have been made by national appraisal organizations to pool

commercial property data provided by their memberships. The attempts have failed for
the most part due to lack of incentive, fiduciary issues and parochial attitudes.

Market leasing and vacancy information. National brokerage firms can readily
provide leasing and vacancy information in many of the markets in which a property is
located. The national real estate firms typically participate in the 60 primary U.S. urban
commercial markets and publication of leasing and vacancy information is specific to
these areas. There is no single source for related data in secondary markets. Local real
estate companies (sales, management and appraisal) typically compile data on the
markets in smaller communities and rural areas and data availability is unpredictable.

Property Revenue and Expense Information

Property owners are required to submit income and expense information

annually regarding a financed property as a condition of the commercial loan. Obviously
these data can be checked through an audit, if permitted, and through comparison to
benchmark data sources (e.g., leasing information from brokers and expense
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 17

information from BOMA or IREM12). Typically, revenue and expense information is

considered proprietary and, although trends and indices are developed and published in
certain markets, specific property data is usually available only to the parties to the
transaction, the lender, and the appraiser, who is bound by confidentiality rules.
Professional organizations such as BOMA and IREM collect data from their
membership and aggregate the information, providing only summary ratio data, thereby
protecting the privacy of individual property owners or managers.

Capitalization rate data

Finally, capitalization rate13 information would be obtained from national

information providers such as the Korpacz Real Estate Investor Survey or the National
Real Estate Index (a joint venture of Ernst and Young, Kenneth Leventhal and the Koll
Company). Most appraisers maintain their own private databases of transactional
information that include this information. Investor survey rate data is usually used as a
benchmark in the appraiser’s determination of an appropriate overall rate for a particular
property. The favored method is the extraction of overall rates from similar properties
that have sold. A second method is the application of a mortgage/equity rate
development formula which weight mortgage and equity contributions allowing a
weighted average result based on the appraiser’s assessment of risk combined with
market mortgage terms. This method also allows for adjustments for anticipated
property appreciation or depreciation.

The nature of commercial real estate is such that the financial attributes of
transactions and the physical attributes of buildings are quite heterogeneous.
Benchmark valuation exercises can be undertaken using localized comparable sale
data (including implied overall capitalization rates), current market rental rates, current
property lease abstracts, and additional micro-market data regarding occupancy rates
and trends. Unfortunately, this type of data is only available in the 60 or so primary U.S.
markets and is generally applicable to investment grade real estate.

The evolution of commercial mortgage-backed securities (CMBS) markets has

pushed the commercial real estate industry to make transactions more transparent.
Rating agencies and investors in CMBS require full disclosure of lease terms associated
with buildings that collateralize mortgages in the CMBS pool. Commercial Mortgage
Backed Securities consist of securities collateralized by a pool of commercial mortgages

12
BOMA is the Building Owners and Managers Association (www.BOMA.org) and IREM (www.IREM.org)
is the Institute of Real Estate Management.
13
The overall capitalization rate is the ration of a property’s net operating income to the property’s market
value. Ratios from comparable properties are employed along with estimates of income from a subject
property to determine an estimate of market value. Most financial institutions will undertake such desktop
appraisals on commercial properties on an annual basis to ascertain the current loan-to-value ratio and assess
the current debt coverage ratio. For properties of significant value, discounted cash flow analysis would be
employed.
 East European Regional
18 Housing Sector Assistance Project

that are packaged and sold to investors. An equivalent are the secondary residential
mortgage backed securities issued by Fannie Mae and Freddy Mac. As the CMBS
market has grown, so has the demand for more and better market information to permit
adequate due diligence with respect to default risk. Rating agencies require stress
testing of after-debt property cash flows under various negative scenarios. Knowledge
of contractual cash flows and market rental rates are essential for the development of
alternative scenarios.

Progress in moving toward transparency in the commercial real estate sector is

far behind the residential sector, but growth in the CMBS markets will promote ways
and means to achieve a more efficient data system applicable to commercial real
estate. The U.S. markets have grown from mostly locally owned commercial property to
a national, institutional market sector for larger institutional grade real estate. Real
estate service providers, including appraisers, have generally not kept up with the pace
of change, and many find it difficult to abandon parochial business practices. More
sophisticated real estate players are searching for more efficient methods of valuation
by combining technology and available data sources. The gap in demand for efficient
valuation services and existing provider services will naturally narrow, but currently the
solution is not fully adequate.

4.0 AN OVERVIEW OF APPRAISAL INFORMATION IN POLAND AND

PRELIMINARY RECOMMENDATIONS

Introduction

Real estate appraisal methodology is relatively well developed in Poland. The

body of knowledge is well integrated with international and European standards and is
closer to English and American than to German and French appraisal practices. The
Polish Federation of Appraisers maintains contact with numerous regional and
international professional organizations.

Appraisal practices in Poland have been influenced by a number of largely

historical factors, including the following:

• First, most Polish appraisers come from the land surveying and construction
engineering professions, both of which tend to emphasize detailed property
descriptions and cost approaches to value, rather than the analysis of
relevant market trends, underlying macro-economic and local socio-economic
factors, and comparable sales data.

• Secondly, at present, the market for appraisal services has been dominated
by statutory requirements associated with the privatization process, including
sales of government owned apartments and auctions of other government
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 19

property. Frequently, the sales prices have been arbitrary and/or subject to
very substantial discounts. These assignments have used a sales comparison
methodology but without in-depth, market-based analysis. As a result, the
clients (usually city and state officials) misunderstand real estate transactions
and appraisal. There has been an insignificant market for appraisal services
associated with market-based mortgage lending activities.

• Thirdly, there has been, and still remains, a lack of access to sales
information and other economic/financial data. Even when transactional
information is available, its quality is questionable, since recorded sales
prices are often underreported in order to avoid transfer taxes.

• Finally, the less frequent use of the income approach has meant that there
exists little demand for data regarding rental markets, typical operating costs,
capitalization rates, discount rates and mortgage rates.

Leaders of the appraisal organizations in Poland claim that their members are
trained in, and apply, the three approaches to value in the appraisal process. However,
it is clear that a lack of reliable, transactional data and limited income approach
experience result in a tendency to use the cost approach to value. Although the cost
approach is a useful tool in appraisal, the indication of value can be outside market
value parameters without corroborating support from the remaining two market data-
based approaches (direct sales comparison and income).

4.1 Public Cadastres

Much of the transactional data in the U.S. originates in a jurisdictional registry of

deeds which is captured by tax authorities to maintain local ad valorem tax systems. In
Poland, collaboration between the Ministry of the Interior (physical cadastre), Ministry of
Justice (legal cadastre), and Ministry of Finance (fiscal cadastre) has been a difficult
struggle. Just recently the three have agreed to work together on developing
communication standards and links between the various nodes of their systems. The
physical cadastre, called “evidence of land and buildings“ (there is a movement to
change the name to real estate cadastre), has land surveying data on land parcels and
very incomplete data on buildings. The legal cadastre (the perpetual books) which
registers ownership titles has very scanty coverage of the country’s real estate. The
fiscal cadastre (the property tax register) has data on taxable objects, a list of property
owners and the owners’ tax liability. Property taxes are based on area, so information
on taxable property is very limited and insufficient for any future ad valorem system.
However, it is noted that tax offices deal with other property taxes, the transfer tax and
gift and inheritance tax, which are related to market prices. Therefore, they have to
regularly monitor market sales in order to control declared sales, gift and inheritance
taxes. In fact, this is the only system in Poland that systematically and regularly collects
transaction data.
 East European Regional
20 Housing Sector Assistance Project

Poland recently completed territorial division and decentralization reforms. Self

government in Poland is now divided into 16 regions (voivods), 380 counties (powiats)
and some 2500 municipalities (gminas). The court system is divided into some 50
district courts. The physical cadastre is located at the powiat (county) level with the
provision that the largest 46 cities are both powiats and gmina (so called urban
powiats). About 50 district courts run the legal cadastre. The fiscal cadastre is run by
larger gminas or by their powiat-like common treasury services. Each cadastre is run by
a different level of government and is overseen by different ministries.

In order to be valid, real estate transactions have to be administered at a notary

public office (fully privatized in Poland since the early 1990s). At the notary’s office, a
deed of conveyance is executed and the title passes (declaratory passage of title).
Thus, notary offices are the primary source of sales data, since all transactions have to
be executed there in order to gain validity by law. The notary is required by law to send
three copies of the deed of conveyance: one to the legal cadastre, one to the physical
cadastre, and one to the fiscal cadastre.

Title records in the legal cadastre are incomplete. The deed of conveyance is
held as an attachment to the title records, but is not publicly available (it is accessible
only to the owner or other “entitled” party). Information on the new owner and the
boundaries of the property is publicly available. There is also no obligation to register a
title, since the title passes through a deed of conveyance with the notary. The cost of
title registration (stamp duty) is also a detriment to legal cadastre recording. This is not
to be confused with the transfer tax collected by the notary. It is likely that title-recording
activity will increase as mortgage financing becomes more widespread and borrowers
are required to have their titles registered. It is unlikely, however, that the legal cadastre
will register transaction prices.

The notary sends the second copy of the deed of conveyance to the physical
cadastre. This cadastre is relatively complete regarding parcels of land, but very
incomplete as to building descriptions. The physical cadastre registers new owners,
although they have no legal requirement to do so. The physical cadastre describes the
class of soil and, if available, the building location on the lot, with footprint area, number
of stories in the building, and building materials (fireproof, not fireproof).

The notary sends the third copy of the deed of conveyance to the fiscal cadastre.
Local tax offices need to collect deeds of conveyance not only to register a change in
ownership, but also to monitor market trends in order to audit price/value declarations
made in deeds of conveyance and in cases of gifts and inheritances. If the tax office
feels the declared price/value is understated, it may order a special appraisal based on
market transaction data and adjust the tax accordingly. The fiscal cadastre system is
the only systematic and comprehensive system in Poland collecting and using market
transaction data. As the government prepares for ad valorem reform of property taxes, it
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 21

is considering enhancing the physical cadastre data and collecting additional

information on taxable properties through direct taxpayer declarations.

An important issue is whether the fiscal cadastre data will be made available for
public use. The Ministry of Finance, which is working on the ad valorem reform, has
publicly declared the need to make this data available to the public, since the appeal
process will require open access to the data. The Ministry has also indicated an
awareness that transparency in the market is needed in order to stimulate economic
activity, provide for easier ad valorem assessments, and generate more revenues from
property sale activity.

4.2 National and Regional Macroeconomic Data

The Central Office of Statistics (GUS) collects macroeconomic data that are
disaggregated by voivodship zones. It is a systematic process, but often lacks spatial
disaggregation into smaller areas (city districts, smaller municipalities, villages) and
excludes much data relevant for appraisal purposes (e.g., disposable household
incomes, location of employment, office space inventory, etc.). It is important to note
that much statistical data is collected in Poland both through census and through
regular corporate reporting, but there is a lingering tradition in which most of it is
collected for central government purposes rather than for an information infrastructure
for economic development. This is changing, but a strong push for more open access is
recommended.

Additional information exists at the government level concerning housing

construction, housing stock and household statistics, mostly gathered through
infrequent census programs. Poland is well acquainted with the technologies associated
with Geographic Information System (GIS). Although there is a professional movement
advocating development of a GIS system for the country, it lacks a formal authority.
Existing geo-coded data sets are focused almost entirely on physical attributes of real
properties recorded at the physical cadastre.

Recommendations

• Encourage central and local governments to provide to the public

macroeconomic data to promote economic development.

• Educate the authorities on the merits of disaggregating demographic data into

much smaller basic geographic units, such as census tracts or electoral
districts, which could be geo-coded (x, y coordinates of centroids) for GIS
analysis.

• Commission thorough review (with recommendations) regarding what type of

data should be collected to monitor population and economic trends. Also
 East European Regional
22 Housing Sector Assistance Project

assess the data collection responsibilities of different parts of government in

order to eliminate any duplication of effort and assure accountability for data
accuracy. Generally speaking, all locally specific data collected at the powiat
level and provided to the regional government level.

4.3 Residential Data

As has been noted, residential transactions data with value-determining

attributes are required for a meaningful market-based, sales comparison analysis.
Currently, price and ownership data are recorded in notarial deeds (of conveyance) and
sent by notaries to: (a) title registry (legal cadastres); (b) evidence of land and buildings
(physical cadastres); and (c) treasury/tax chambers (fiscal cadastres). All transactions
are covered by the notarial deeds system, but few value-determining attributes are
recorded in the documentation, and not all transfers are recorded. Information on these
transactions is not currently available to the public, so it is often difficult to get the data
in its raw (notarial deed) form or in any enhanced form.

The only institutions that are required by law to systematically collect and analyze
the sales information are treasury/tax chambers. This is associated with their obligation
to collect transfer taxes, which are related to reported prices (reported in notarial
deeds). The tax chambers have the right to inspect notarial deeds and question the
reported prices if they are inconsistent with market activity. Collection and analysis of all
sales data makes it possible for the chambers to pick out suspiciously low notarial
prices. They can initiate a special investigation, which needs to prove that the reported
price is considerably lower than prevailing market prices.

The primary source of information, other than notarial deeds, is street knowledge
about real negotiations between buyers and sellers. Unfortunately, these can only be
known to the parties themselves or to brokers, if they have been involved. The brokers
in Poland are usually serving both buyers and sellers, and have little interest in
revealing true prices and losing the confidence of both parties. The efforts to start a
Multiple Listing Service have not been widely successful in Poland, as the exclusive
right to sell is poorly enforced, which makes many brokers apprehensive about sharing
their listings with others. In addition, many transactions are completed privately, without
the involvement of brokers.

Recommendations

• Encourage an enhancement of transactional data collected by treasury/tax

chambers by adding a number of value-determining (hedonic) attributes to the
data set being collected. These chambers will become powiat/county fiscal
offices, which will have the role of operating physical and fiscal cadastres (for
ad valorem property taxes).
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 23

• Educate real estate brokers about the benefit of multiple listing services. MLS
participants might also be educated on the benefits of GIS technology.
• Allow public access to all transactional data.

• Work towards lowering of transfer taxes or reclassifying them as

administrative fees independent of transaction prices. This is currently being
considered in legislative work on ad valorem property tax reform.

• Allow public access to land use, zoning, planning and building permits data.

• Suggest that lenders participate in the real estate data system with price and
descriptive information of properties, which are financed. This will be an
alternative check on cadastre data accuracy. Lenders would likely support
this data collection effort when they recognize the value of the data set for
collateral valuation and portfolio maintenance.

4.4 Commercial Data: Property Price, Income, Expenses and Cap Rate

Comments in the recording of residential sale price data, noted in Section 4.3
above, are also relevant to commercial transaction. In Poland, data are needed relating
to value-determining factors which are not linked to physical characteristics (as with
residential real estate). Data are also needed related to income-earning potential (rental
income and operating expenses) and on discount and cap rates (risk adjusted return
requirements), as well as mortgage markets (mortgage interest rates and terms).

Appropriate application of the income approach includes an analysis of actual

income achieved by similar properties in a given market. Leases are typically not
recorded. Property management professions and property owner organizations are still
in early stages of development in Poland. Little data is available on vacancy rates, and
market condition surveys are found only in the primary urban real estate arenas.

Market capitalization rate data is essentially non-existent in Poland and the

derivation of these rates from other data (capital and financial markets) is not well
understood by most appraisers. There are some general benchmarks published on the
cash-on-cash rates to be applied for commercial investments in Warsaw and several of
the major cities, but no formal surveys exist.

It is unlikely that the public sector will extract and maintain data necessary for
commercial property valuation. Similar to the single-family residential market,
transactional price data could easily be maintained by a property taxing or assessment
agency. This would insure that one of the critical pieces of data (not otherwise available)
for accurate appraisals would be publicly available. As in the case of the single-family
residential market, it would be important to encourage reporting from multiple sources
(e.g., buyer, seller, and lender) so that accuracy is monitored.
 East European Regional
24 Housing Sector Assistance Project

Industry and trade groups or private entrepreneurs need to be encouraged to

develop and maintain databases that are publicly available at low cost. Providing rental
rate data, undertaking periodic market studies to generate vacancy rate information and
providing updates on market-wide capitalization rates are natural outgrowths of the
commercial leasing and investment brokerage business. The reporting of expense
ratios by property type is a natural outgrowth of property management professional
groups. To the extent possible, government officials and agencies need to support and
encourage the development of such activities. As professional or trade organizations
are formed, information collection and dissemination should be part of their mission.

Bank regulations should require lenders to include, as a condition of loans, the

annual updating of property and borrower financial information critical to the original
underwriting of the loan. This would facilitate periodic “desk-top” appraisal updates. A
non-response on the part of the borrower should be viewed as a technical default.
Lenders should also require the right to inspect the property. For larger properties,
copies of lease documents should be provided to lenders. The collection and cataloging
of operating data would provide a valuable source information for market trend analysis
and portfolio maintenance. The National Bank of Poland could then issue market
reports on economic and real estate trends similar to those issued by the Federal
Reserve Banks in the U.S.14

Recommendations

• Transactional data – See Section 4.3, Residential Data – Recommendations.

• Support efforts to geo-code demographic and transactional data as well as

easy and quick user-fee supported access to these data.

• Encourage and support the property management profession to begin

building data sets from their members that will provide annual information on
operating expenses of alternative types of property (office, multi-family, retail
(shopping malls), industrial).

• Encourage and support commercial leasing brokerage professional

organizations and/or private companies to begin building data sets from their
members that will provide periodic information on rental markets by
geographic market area and property type.

14
Samples—Call Reports (issued to Federal Reserve by U.S. Banks), New England Economic Indicators,
New England Banking Trends, published by the Federal Reserve Bank of Boston.
 Property Valuation and Appraisal
U.S. Information Systems and Recommendations for Poland 25

• Promote public access to lender-collected data supplied by borrowers in initial

loan transactions and periodic updates generated through loan portfolio
maintenance procedures.

4.5 Further General Comments: The Public Sector, the Real Estate Professions
and the Banks’ Role in Information Provision

The public sector, mostly through ad valorem property tax involvement, should
be encouraged to provide public access to price and property attribute information. It is
critical that sales price reporting remains consistent and unchanged, beginning at the
notary level and following to the cadastre level. Dissemination of actual sale price and
property attribute data would most likely come out of the powiat/county levels (380 of
them in Poland). Macro aggregate data collection is currently maintained at the regional
and national levels.

Free market development of additional and value-added data should be

encouraged. Real estate professions should play an important role, given that they have
achieved professional recognition through the creation of licensing and obligatory
membership. The role of banks is also critical, not only in providing portfolio-related
data, but also in developing meaningful and enforceable appraisal requirements to be
followed by professional appraisers providing valuation services in mortgage
transactions.

A unique opportunity exists in Poland to develop a system of collection and

distribution of real estate data based on best practice now in place in the U.S. and
Europe. National price disclosure policies (absent burdensome tax disincentives),
combined with up-to-date physical inventory registries in which professional real estate
associations participate, could provide a model system for real estate market price
monitoring. Implementation of such a system would require significant resources,
abandonment of residual bureaucratic attitudes, and substantial cooperation between
government entities, lending institutions, and the real estate community. Although a
perfect system of market-based valuation cannot insure against economic downturns
and future property price fluctuations, it can provide critical, timely information to
economic policy makers and allow them to monitor regional economic conditions and
make fiscal adjustments accordingly.
 APPENDIX I
Real Estate Trade Associations

The Appraisal Foundation

American Hardware Manufacturers Association
Appraisal Institute
Appraisal Institute of Canada
American Institute of Architects
American Industrial Real Estate Association
American Motel Hotel Brokers
American Planning Association
American Real Estate Association
Association of Real Estate License Law Officials
American Society of Appraisers
American Society of Home Inspectors
Building Owners and Managers Association
Certified Commercial Investment Member
Counselors of Real Estate
Commercial Real Estate Secondary Market and Securitization Association
Employees Relocation Council
European Real Estate Society
Federal National Mortgage Association
International Real Estate Federation - American Chapter
The Foundation of Real Estate Appraisers
Federal Home Loan Mortgage Corporation
The GeoBusiness Association
Government National Mortgage Association
Housing Inspection Foundation
International Association of Assessing Officers
International Council of Shopping Centers
International Development Research Council
Institute of Property Taxation
International Real Estate Institute
Institute of Real Estate Management
Lincoln Institute of Land Policy
Mortgage Bankers Association of America
International Association of Corporate Real Estate Executives
National Association of Home Builders
National Association of Housing and Redevelopment Officials
National Association of Independent Fee Appraisers
National Association of Industrial and Office Properties
National Association of REALTORS
National Association of Real Estate Brokers
National Association of Real Estate Editors NAREIT
National Association of Real Estate Investment Trusts
National Association of Residential Property Managers
National Council of Real Estate Investment Fiduciaries
National Multi Housing Council
National Network of Commercial Real Estate Women
Pension Real Estate Association
Real Estate Capital Resources Association
Real Estate Educators Association
Real Estate Information Providers Association
Royal Institution of Chartered Surveyors
Society of Industrial and Office Realtors
Urban Land Institute
Urban and Regional Information Systems Association
Women's Council of Realtors WIRE -- Women in Real Estate
 APPENDIX II
U.S. Real Estate Research Centers/Web Site Addresses

University
Internet Web Address

Alabama Real Estate Research and Education Center

http://cbasss3.cba.ua.edu/college/r/realmain/

Arizona Real Estate Center

http://www.cob.asu.edu/seid/arec/

Florida State University Real Estate Research Center

http://www.fsu.edu/~rmidept/real/research.html

Homer Hoyt Center for Land Economics and Real Estate

http://www.ispa.fsu.edu/homer_hoyt.html

Indiana University Center for Real Estate Studies

http://www.indiana.edu/~cres/cres.html

MIT Center for Real Estate

http://web.mit.edu/cre/www/

New York University Real Estate Institute

http://www.sce.nyu.edu/rei/

Southern Methodist University Center for Research in Real Estate & Land Use
Economics
http://www.cox.smu.edu/finance/realcen.html

Real Estate Center at Texas AM University

http://recenter.tamu.edu/

University of British Columbia Centre for Real Estate and Urban Land Economics
http://www.commerce.ubc.ca/RULE/rule.html

University of California/Berkeley Fisher Center for Real Estate and Urban Economics
http://www.haas.berkeley.edu/~creue/

University of Cincinnati Center for Real Estate Studies

http://www.cba.uc.edu/getreal/
University of Connecticut Center for Real Estate and Urban Economic Studies
http://mktg.sba.uconn.edu/fin/realest/index.html

University of Hawaii Real Estate Research and Education Center

http://www.cba.hawaii.edu/rec/

University of Illinois Office of Real Estate Research

http://www.cba.uiuc.edu/orer/orer.htm

University of Kentucky Center for Real Estate Studies

http://ukcres.gws.uky.edu/exp/index.html

University of North Carolina Center for Urban and Regional Studies

http://www.unc.edu/depts/curs/

University of Reading Department of Land Management and Development

http://www.reading.ac.uk/LM/

University of Southern California Lusk Center Research Institute

http://www.usc.edu/dept/supd/Research/LCRI/

University of Wisconsin Center for Urban Land Economics Research

http://wiscinfo.doit.wisc.edu/bschool/urbland.html

Virginia Center for Housing Research

http://www.arch.vt.edu/CAUS/RESEARCH/vchr/VCHR.html

Washington State University Real Estate Center

http://www.cbe.wsu.edu/~wcrer/
 APPENDIX III
U.S. REAL ESTATE DATA SOURCES

I. General and Macroeconomic Data

II. Construction Data
III. Residential Real Estate Data
IV. Commercial Real Estate Data

I. General and Macroeconomic Data

Organization: American Council of Life Insurance

Series name: Mortgage Loan Delinquencies
Description: Quarterly data on mortgage loan delinquencies and foreclosures for
life insurance companies. Data are provided by collateral (1-4 family, apartment, retail,
office building, industrial, hotel/motel, farm, etc.) and by region of the country regarding
delinquent total loans outstanding, delinquent loans, loans in foreclosure, foreclosed
loans (for all classes, numbers and amount of principal are provided.)

Organization: American Council of Life Insurance

Series name: Real Estate Owned by U.S. Life Insurance Companies.
Description: Data on real estate owned by U.S. life insurance companies by
year and by state (by farm and non-farm) and type (occupied by company, acquired in
satisfaction of debt, and purchased for investment.)

Organization: Board of Governors of the Federal Reserve System

Series name: Senior Bank Lending Officers Survey
Description: Quarterly survey of senior bank lending officers. Provides data on
bank lending policies with regard to various loan categories including real estate loans.
Focuses on tightness/ease of credit standards by banks.

Organization: Board of Governors of the Federal Reserve System

Series name: Flow of Funds Accounts
Description: Flows of financial assets and outstanding financial assets/liabilities
in the U.S. economy. Includes data on mortgages owed and owned by sector of the
economy including households, financial institutions, and various classes of business.

Organization: Board of Governors of the Federal Reserve System

Series name: Balance Sheets for the U.S. Economy
Description: Estimates of the dollar value of tangible and financial assets,
liabilities, and the net worth for the private sectors of the economy (household sector,
business, and private financial institutions). Includes data on real estate (structures and
land) and mortgages. Structures data are from the Bureau of Economic Analysis Fixed
Reproducible Tangible Wealth series.
Organization: Bureau of Economic Analysis
Series name: U.S. Direct Investment Abroad
Description: Estimates covering the financial structure and operations of non-
bank foreign affiliates. Includes data on U.S. investment in foreign real estate. Includes
data on employment and financial status of real estate firms' foreign activities, Similar
data for construction and engineering firms.

Organization: Bureau of Economic Analysis

Series name: National Income and Product Accounts (annual) (NIPA)
Description: Annual data on gross product originating in subsectors of the U.S.
economy. Includes the following data for construction, non-farm housing services and
real estate except non-farm housing services: (1) current dollar gross product
originating in the sector, (2) wages and salaries paid, (3) supplements to wages and
salaries, (4) net interest generated, (5) proprietor's income, (6) proprietor's inventory
valuation adjustment, (7) corporate profits before tax, (8) corporate inventory (9) rental
income of persons (real estate only), (10) business transfer payments, (11) indirect
business tax and non-tax liability (12) subsidies (13) non-corporate capital consumption
allowance, (14) corporate capital consumption allowance, (15) index of real gross
product originating, (16) constant dollar gross product originating (fixed 1987 weights)
(17) current dollar gross output (18) current dollar intermediate inputs (19) constant
dollar intermediate inputs, (20) intermediate inputs fixed-weights implicit price deflators.

Organization: Bureau of Economic Analysis

Series name: Fixed Reproducible Tangible Wealth (FRTW)
Description: Estimates of the dollar value of all assets in the U.S. exclusive of
inventories. Valued at current-cost and constant-cost. Estimates of gross stock, capital
input, net stock, depreciation, discards and investment. While the mission of the FRTW
excludes land, the staff prepares unpublished estimates of the total value of land by
private, federal and state governments.

Organization: Bureau of Economic Analysis

Series name: Foreign Direct Investment in the U.S.
Description: Data on foreign investment in the United States by industry and
country. Includes data on foreign direct investment by country in U.S. real estate. Also
data on employment, sales, etc. in real estate by country of ownership. Similar data for
construction and engineering.

Organization: Bureau of Economic Analysis

Series name: Input-Output Accounts of the U.S.
Description: Input-output tables show estimates of the amounts of various goods
and services that are used as inputs to the production of other goods and services. In
particular, the tables show measures of where the output of real estate sectors are used
as inputs to other sectors as well as the amount that is used to meet final demand. The
tables also show the amount of other goods and services are used as inputs into the
real estate industry.
Organization: Bureau of Economic Analysis
Series name: National Income and Product Accounts (Quarterly) (NIPA)
Description: The NIPAs show the nation's production, distribution, consumption,
and saving. Includes quarterly statistics on spending on residential and non-residential
structures, deflators for detailed product groupings including structures and housing
services.

Organization: Bureau of Labor Statistics

Series name: Multifactor Productivity
Description: Productivity measures of the business economy and major
subsectors. Includes detailed annual data on productivity, prices, and stocks of
structures, rental residential capital, land, as well as equipment and inventories. Data
are subdivided into broad sectors as follows: manufacturing/non-manufacturing and
farm/non-farm.

Organization: Bureau of Labor Statistics, Office of Employment Projections

Series name: Productivity in real estate services and construction
Description: Output in current and constant dollars, employment, hours of all
persons, average weekly hours all persons. Includes figures for the real estate and
construction industries.

Organization: Bureau of the Census

Series name: Survey of Income and Program Participation (SIPP)
Description: Provides microdata records for households from a longitudinal
survey. The survey provides information on the economic, demographic, and social
situations of the household members. Includes data on real estate and mortgages.

Organization: Bureau of the Census

Series name: Census of Financial, Insurance, and Real Estate Industries
Description: Detailed data from the 1992 census. Data by 4-digit codes on
number of establishments, revenues, payrolls, number of employees, industry
concentration, and legal form of organization. Geographic area series includes data by
state and metropolitan area allocated to 4-digit codes.

Organization: Bureau of the Census

Series name: Government Finances
Description: Covers government finance activities. Includes data on expenses
and income (including property taxes) by state at various levels of government (state,
county, municipalities, townships, school districts, and special districts.)

Organization: Bureau of the Census

Series name: Census of Governments: Taxable Property Values
Description: Provides detailed data, by state, of assessed property values. Data
can be used to infer value of property if assessed values can be grossed up to yield
estimates of market values.
Organization: Callan Associates
Series name: Callan Real Estate Database
Description: Consists of data from approximately 170 open-end (40 funds) and
closed-end commingled funds (approximately 130 funds). The database has a market
value of approximately $40 billion. Provides data on returns (broken down by income
and capital appreciation/depreciation (net of investment management fees) and market
value.

Organization: Department of Housing & Urban Development

Series name: Survey of Mortgage Lending Activity
Description: Data on construction and mortgages loans by class of lending
institution, class of collateral (1-4 family, multifamily, non-residential, farm). Also data on
loan originations, loan purchases and sales, repayments, etc.

Organization: Department of Transportation

Series name: American Travel Survey 1995
Description: Measures interstate and inter-metropolitan passenger travel
nationwide by trip and traveler characteristics for all models and for intermodal
combinations. Data will be reviewed and released after each quarter in 1995.

Organization: Department of Transportation

Series name: National Transportation Statistics: 1995
Description: A compendium of selected national transportation data and
transportation-related energy statistics. Includes data on journey-to-work trends.

Organization: Economic Research Service

Series name: Major Land Uses (MLU)
Description: MLU database contains acreage estimates of major land uses for
the United States by region and states for each Census of Agriculture year between
1945 and 1987. Land use categories are: urban, wildlife areas & parks, forest land,
pasture land, cropland and miscellaneous (desert, tundra, swamp, highways, defense
areas, etc.)

Organization: Evaluation Associates,

Series name: Real Estate Profiles
Description: Real Estate Profiles covers over 100 open-end and close-end
commingled real estate funds offered by banks, insurance companies, and independent
advisors. Provides data on portfolio characteristics and performance. Includes summary
data on fund averages including, data on property type, property location by region,
property size, property age, investment type, total return, etc.

Organization: Federal Deposit Insurance Corp. (FDIC)

Series name: Statistics on Banking
Description: Detailed data on U.S. banking sector. Includes data on real estate-
secured loans. Breakdown by various categories of loans and size of and type of
financial institution.
Organization: Federal Deposit Insurance Corp.
Series name: Survey of the Real Estate Trends
Description: Residential and commercial real estate trends. Based on
assessments by Senior Examiners and Asset Managers at Federal Bank and Thrift
Regulatory Agencies. Includes indexes of perceived strength of real estate markets.
Provides indexes for commercial and residential markets.

Organization: Federal Financial Institutions Examination Council (FFEIC)

Series name: Reports of Condition and Income (Call Report) Data
Description: Call reports are filed by financial institutions with the FDIC, Office of
the Comptroller of the Currency, and the Federal Reserve. Call report data include
detailed information on real estate finance by financial institutions including mortgage-
backed securities, real estate loans.

Organization: Frank Russell Company

Series name: Russell-NCREIF Property Index
Description: The Index provides the following data broken out by property type
and major regions: (1) Historical return series by year and by quarter (annual and
annualized); (2) Count, or number, of properties for that category and time period; (3)
The aggregate market value of the properties at quarter end; (4) Quarterly index values
for total, income, and capital; and (5) Quarterly returns for total, income and capital.

Organization: General Services Administration

Series name: Federal Real Property in the U.S., By Agency and Bureau
Description: Includes information on Federal land acreage (urban and rural),
Federal buildings (number and floor area-square ft.) and cost of land, buildings, and
structures. Provides data by agency, state, and foreign locations

Organization: HSH Associates

Series name: Database provides data on mortgage rates. Represents the result
of weekly surveys of about 2,500 lenders (3,000 once each month). Provides data on
loan amount and terms including down payment, interest rates, points, application fee,
etc.

Organization: Internal Revenue Service (IRS), Statistics of Income Division

Series name: Federal Estate Tax Returns Data
Description: Provides data on assets (including real estate) and liabilities
(including mortgages) at death by taxpayers whose heirs are subject to the estate tax.
Data are available by size of net worth.

Organization: Lehman Brothers

Series name: Mortgage Backed Securities Index
Description: Index includes all fixed-rate securities backed by mortgage pools of
GNMA, Freddie Mac, FNMA mortgages

Organization: Liquidity Financial Group/Ernst & Young LLP

Series name: National Real Estate Index
Description: Quarterly data by market and property type (e.g., office,
warehouse, retail, apartment), price per square foot, rent per square foot, cap rate.

Organization: National Association of Real Estate Investment Trusts

Series name: NAREIT Index
Description: Total return index for Real Estate Investment Trusts (REITs). Data
based on closing price of the month for all tax-qualified REITs listed on the New York
Stock Exchange and the NASDAQ. The data are market weighted.

Organization: National Association of Real Estate Investment Trusts

Series name: REIT Executive Compensation Survey
Description: Surveys salaries within the REIT industry for the top 17 positions.

Organization: National Association of Real Estate Investment Trusts

Series name: REIT Administrative Survey
Description: Survey covers administrative expenses, security offering expenses,
advisor and trustee fees, fee structure and practices. Also includes stock option and
dividend reinvestment and practices.

Organization: Office of Management and Budget

Series name: National wealth
Description: Estimates of a broadly defined national balance sheet. Includes
estimates of national real estate assets (although real estate is sometimes co-mingled
with equipment). Also includes education capital and R&D capital. The broadening the
definition of national wealth to include education capital and R&D capital considerably
reduces real estate's share of national wealth. According to these estimates, education
capital accounts for half of national wealth.

Organization: Pensions and Investments

Series name: Pensions investment in real estate equity and mortgages
Description: Special issue of Pensions and Investments provides listing of the
pension funds with the largest exposure in real estate equity, mortgages, and mortgage
backed securities.

Organization: Real Estate Research Corporation

Series name: Real Estate Report
Description: Real Estate Investment Criteria by Property Type Real Estate vis-a-
vis Capital Market Returns Inter-market Yield Spreads Historical Real Estate Yield
Spreads (from 1979) Current Investment conditions by property type Equity REIT
Outlook Apartment REITs

Organization: Real Estate Research Corporation

Series name: Real Estate Investment Survey
Description: Survey of expected returns, property selection criteria, and
investment outlook of a representative sample of large institutional investors in the U.S.
Summary data include assessment of internal rate of return, going-in cap rate, income
and expense growth rates, anticipated holding period, and long term inflation
expectations.

Organization: Real Estate Research Corporation/Equitable Real Estate

Series name: Emerging Trends in Real Estate
Description: Data on prices and yields, values, capital losses, capitalization rate
bid/ask characteristics, capital flows, capital sources, total returns by property type,
industrial, retail, office and apartment property returns, private construction v. industrial,
office and apartment vacancy rates, multifamily housing starts, hotel occupancy and
average daily rate. Based on interviews of a 100-person panel of experts. National and
regional figures.

Organization: REIS Reports

Series name: REIS Reports
Description: Detailed trend information on demand, supply, vacancies and rents
at the building, sub-market, and metropolitan levels. Has data on over 50 metropolitan
areas and hundreds of submarkets. Based on proprietary database consisting of 39,000
apartment complexes, 39,000 office buildings, 26,000 shopping centers, and industrial
properties.

Organization: Robert A. Stanger & Co.

Series name: Stanger Report
Description: Database covering real estate limited partnerships. Data include
information on prices, sales, sponsors, registrations, Also includes data on REIT market
performance and market value.

Organization: The Wharton School Real Estate Center

Series name: Credit Availability Index (CAI)
Description: The index is a compilation of standardized movements in nine
economic variables including housing starts, money supply (M2), loans outstanding,
S&P 500, consumer sentiment, unemployment, interest rate differentials, and gross
saving.

Organization: Valuation International, Ltd. - Valuation Network Limited

Series name: Investment real estate data.
Description: Provides data based on surveys of local real estate experts. Data
on inventory, vacancy rates, vacancy in square feet, mall absorption, space under
construction, total value change, forecast total value change for retail, office, and
industrial space. Also provides data on cap rates and discount rates. Some data for
foreign countries.

Organization: Wharton Real Estate Center.

Series name: Leveraged Property Index Report
Description: This report presents value-weighted, chain-linked indexes
analogous to those calculated for the unleveraged Russell-NCREIF Property Index.
Organization: Wilshire Associates Incorporated
Series name: Wilshire Real Estate Securities Index
Description: A market capitalization weighted index of publicly traded real estate
securities such as: REIT, REOC, and partnerships. The Index is compromised of
companies whose charter is the equity ownership and operation of commercial real
estate. Includes five major categories of property: office, retail, industrial, apartment and
misc.

Organization: Wilshire Associates Incorporated

Series name: Wilshire Real Estate Fund Index
Description: A composite average representing the performance of 47 open and
closed end real estate funds and private REITs managed by 23 different investment
advisors. The funds measured in the index acquire income-producing properties that
are considered "core" investments: industrial office buildings, retail centers, and select
multi-family properties. Acquisition structures are typical of institutional investors and
are primarily equity oriented.

II. Construction Data

Organization: Bureau of the Census

Series name: Census of Construction Industries
Description: The Census of Construction Industries is reported in three series
(1) industry series, (2) geographic series and (3) legal form of organization and type of
operation. The industry series data are broken down into 27 construction industries.
Data include number of establishments, value of construction work completed, payrolls,
hours worked, and costs. The geographic area series provides statistics for States
grouped according to the nine census geographic divisions. Data for each geographic
region is given for establishments classified by employment size, and dollar value of
business done. The legal form series breaks data out by corporation, partnership and
sole proprietorship.

Organization: Bureau of the Census

Series name: Building Permits by State
Description: Provides residential and nonresidential data on computer printout
and computer diskettes for states, metropolitan areas and permit issuing places. Annual
data from 1980, monthly data from January

Organization: Bureau of the Census

Series name: Construction Statistics
Description: Presents information on new privately owned one-family houses
sold during the month and for sale at the end of the month, together with related annual
data and figures for prior months.

Organization: Bureau of the Census

Series name: Expenditures, Nonresidential Improvements & Repairs
Description: Presents, by size of building (in square feet) and selected building
characteristics (principal activity, year constructed, and region), expenditures for
improvements and repairs.

Organization: Bureau of the Census

Series name: New Residential Construction
Description: Presents quarterly estimates of the number of new, privately owned
residential housing units authorized by building permits, authorized but not yet started,
started, under construction, and completed.

Organization: Bureau of the Census

Series name: Value of New Construction Put in Place
Description: Presents estimates of the value of total new construction put in
place by type of construction (residential, nonresidential, public utility, public buildings,
and the like) and by type of owner (private, state or local, or federal government).

Organization: F.W. Dodge/DRI Construction and Real Estate Information

Series name: Construction Data
Description: Provides detailed data on construction put in place, construction
contracts, etc. Publishes Dodge Index.

Organization: Marshall and Swift

Series name: Construction cost data
Description: Provides highly detailed construction cost data by geographic
location and building type.

III. Residential Real Estate Data

Organization: Board of Governors of the Federal Reserve System

Series name: Survey of Consumer Finances
Description: Data on the ownership of assets based on a survey of households.
Recent surveys were conducted in 1983, 1986, 1989, and 1992. Includes data on
ownership of real estate and mortgages. Summary data available, but tapes with micro-
data are also available.

Organization: Bureau of Labor Statistics

Series name: Consumer Price Index (CPI)
Description: Inflation in the house-price subindex of the CPI is a measure of
house price changes.
Organization: Bureau of Labor Statistics, Office of Employment Projections
Series name: Consumer Expenditure Survey
Description: Provides detailed data on consumer spending patterns based on
two survey panels of approximately 5,000 each. Data include spending on market value
of home, expenditures on mortgages, property taxes, property insurance, utilities, and
services, by tenure status and other breakdowns.

Organization: Bureau of the Census

Series name: American Housing Survey
Description: Data on housing and household characteristics for the four regions
of the U.S. and the country as a whole. Also provides breakdowns by urban/rural area
and metropolitan/non-metropolitan area. Data are provided on total housing units,
occupied housing units, owner-occupied units, renter-occupied units, occupied units
with a black householder, occupied units with Hispanic householder, units in central
cities, and units in suburbs. Data include income of families, monthly housing costs,
type of structure, costs of utilities, condition of building, amenities, type of finance, etc.

Organization: Bureau of the Census

Series name: Census of Population and Housing
Description: Provides highly detailed data on housing in the U.S. including data
on occupancy, rent, tenure, units in structure, vacancy, value of home, congregate
housing, boarded-up units, rent, number of rooms in housing unit, etc.

Organization: Bureau of the Census

Series name: Expenditures, Residential Improvements & Repairs
Description: Provides estimates of expenditures by property owners for
maintenance and repairs, additions, alterations, and major replacements to residential
properties during the current quarter and for specified preceding quarters, with some
comparative data for earlier years.

Organization: Bureau of the Census

Series name: Housing Completions
Description: Provides monthly statistics on the number of new privately owned
housing units completed and under construction.

Organization: Bureau of the Census

Series name: Housing Starts
Description: Provides monthly statistics for the United States and regions on
new privately owned housing units started; authorized in permit-issuing places; and
authorized, but not started at the end of period.

Organization: Bureau of the Census

Series name: New One-Family Houses Sold
Description: Presents information on new privately owned one-family houses
sold during the month and for sale at the end of the month, together with related annual
data and figures for prior months. Seasonally adjusted and unadjusted data on months'
supply at current sales rate, median number of months on the sales market, average
and median sales prices. Also constant-quality house price index.

Organization: Bureau of the Census

Series name: American Housing Survey for the [name] Metropolitan Area
Description: Data on housing and household characteristics for eleven
metropolitan areas [Anaheim-Santa Ana, Pittsburgh, Cincinnati, Kansas City. Miami-Ft.
Lauderdale, New Orleans, Portland, Rochester, San Antonio, Riverside-San
Bernandino-Ontario, Denver] Data are provided on total housing units, occupied
housing units, owner-occupied units, renter-occupied units, occupied units with a black
householder, occupied units with Hispanic householder, A very wide range of data
includes building conditions, number of rooms, education of householder, income data,
housing costs as a percent of income, etc.

Organization: Bureau of the Census

Series name: Housing Vacancies and Home ownership
Description: Provides statistics on occupied and vacant housing units, housing
inventory, home ownership rates, and characteristics of vacant housing units.

Organization: Bureau of the Census

Series name: Market Absorption of Apartments
Description: Presents data concerning the rate at which non-subsidized,
privately financed, unfurnished units in buildings with five or more units are rented or
sold.

Organization: Case Shiller Weiss, Inc.

Series name: Home Price Indexes
Description: Home price indexes based on repeat sales methodology. Indexes
are produced for metropolitan areas across the country and cover both single-family
homes and condominiums.

Organization: Department of Housing & Urban Development

Series name: Federal Housing Agency (FHA)
Home Mortgage Characteristics Section 203(B)
Description: Very detailed data on characteristics of FHA mortgages. Includes
data on price, characteristics of structure, borrower, and terms of mortgage.

Organization: Bureau of the Census

Series name: Current Housing Surveys: Miscellaneous Reports
Description: Occasional reports. Recent titles include: "Housing Characteristics
of Selected Races and Hispanic Origin Households in the United States: 1987,"
"Housing Market Analysis in the Northeast Region," Housing Market Analysis in the
South Region," Home ownership Trends in the 1980s," Housing Characteristics of
Recent Movers," "Homeowners and Home Improvements: 1987," "Household
Characteristics of One-Parent Households: 1989," "United States Regional Supply and
Demand for Housing During the 1980s," "Home Alone in 1989," "How Regions Compare
in Housing Costs and Living Space: 1989," "First-Time Homeowners in 1989: A
Comparative Perspective," Our Nation's Housing in 1991," "Housing in America:
1989/1990"

Organization: Federal Financial Institutions Examination Council (FFEIC)

Series name: Home Mortgage Disclosure Act Data
Description: Provides detailed data on home mortgage applications and
approvals by demographic characteristics (age, sex, race), income, geographic location,
and house characteristics.

Organization: Federal Home Loan Mortgage Corp. (Freddie Mac)

Series name: Mortgage interest data
Description: Monthly data on fixed-rate and adjustable rate mortgage terms
including interest rates, fees and points by maturity.

Organization: Federal Housing Finance Board

Series name: Mortgage data
Description: Terms on conventional home mortgages. Categories include:
contract rate, fees and charges, effective rate, term to maturity, loan amount, purchase
price, loan-to-price ration, number with ARM. Data are available by type of lender, new
and previously occupied homes, metropolitan area.

Organization: Haurin, Donald R.; Patric Hendershott; and

Dongwook Kim [research paper]
Series name: Local House Price Indexes
Description: Composite indexes for 135 locations estimated using a model
based on three house price panel data sets for the period 1982-91.

Organization: Mills, Edwin S. and Ronald Simenauer [research paper]

Series name: Hedonic Estimates of Regional Constant Quality House Prices
Description: Estimates of constant quality house prices for four regions of the
country based on data set of 5,581 dwellings sold between 1986 and 1992. The
National Association of Realtors compiled the data set.

Organization: Mortgage Analytics, Inc.

Series name: Berkshire/Barnes Multifamily Mortgage Index
Description: The Berkshire/Barnes Multifamily Mortgage Index (BBM) measures
the quarterly total return produced by a representative portfolio of institutional-grade
multifamily mortgages. The index is constructed on a total return basis, where the
changes in portfolio income and portfolio value are taken into account. The BBM is
calculated with and without adjustment for credit losses.
Organization: Mortgage Bankers Association of America
Series name: National Delinquency Survey
Description: Delinquency Rates of 1 to 4 unit residential mortgage loans,
seasonally adjusted. Broken down by all loans, conventional, Veterans’ Administration
(VA) and Federal Housing Agency (FHA). National, regional, and state breakdown.
Past-due 30, 60 and 90 days or more.

Organization: Mortgage Insurance Companies of America

Series name: Private Mortgage Insurance Activity
Description: Monthly data on mortgage insurance activity including, number of
applications, commitments, and certificates, dollar value of primary new insurance
written, primary insurance in force, new pool insurance written, pool insurance in force.
Also includes data on defaults and cures.

Organization: Mortgage Risk Assessment Corporation (MRAC)

Series name: Home Price Index
Description: MRAC's services are based on a comprehensive database of
monthly sales information on 45 million residential properties spread across 450
counties in 42 states. From these data, home price indices are constructed using the
repeat sales method. These indices measure changes in the value of an average unit in
a particular price range and geographic area (county & zip code). Includes data on loan-
to-value ratios, current property values, identifies properties that have gained or lost
equity.

Organization: National Association of Home Builders

Series name: Housing Opportunity Index
Description: Index is a measure of housing affordability. It is available for
approximately 190 metropolitan areas. The index is calculated by region and is based
on median income relative to total housing carrying costs (including interest, principal,
taxes, insurance, etc.) It is assumed that a family can afford to spend 28 percent of
income on housing. The index measures "the proportion of homes sold in a specific
market that a family with median income in that market can afford to buy." Underlying
data are from Department of Housing and Urban Development (HUD) and TRW-REDI.

Organization: National Association of Realtors

Series name: Sales Price of Existing Single-Family Homes
Description: Median and average Sales prices of existing single-family homes
for the United States and each region; Northeast, Midwest, South, West

Organization: National Association of Realtors

Series name: Housing Affordability Index
Description: Composite Affordability Index for the United States and its four
major regions. Index assumes principal and interest should be 25 percent of income.

Organization: National Association of Realtors

Series name: Existing Home Sales
Description: Number of existing home sales in the U.S. and for four major
regions.

Organization: TRW-REDI
Series name: Property data
Description: Extensive micro-data on residences. Includes data on sale price,
price per square foot, property characteristics.

Organization: U.S. Housing Markets

Series name: Hotness Index
Description: Number of new housing permits per thousand population.

Organization: William Stephens, et. al.

Series name: Agency Repeat Transactions Index
Description: House price index (quarterly) based on repeat sales, based on
loans purchased by Freddie Mac and Fannie Mae from 1975 through 1992. Updates are
planned. Includes sub-indexes by geographic region: east north central, east south
central, middle Atlantic, Mountain, New England, Pacific, south Atlantic, west north
central, west south central region. Designed to facilitate comparison of housing activity
among markets.

IV. Commercial Real Estate Data

Organization: American Council of Life Insurance

Series name: Mortgage Commitments on Commercial Properties
Description: Survey of mortgage commitments on commercial properties.
Reporting companies account for 69 percent of commercial mortgages held by U.S. life
insurance companies. Includes detailed breakdowns on volume of commercial
mortgage commitments, interest rates, maturity, debt coverage, type of loan by property
type, ownership, etc.

Organization: American Hotel and Motel Association

Series name: Lodging Industry Profile
Description: Data on number of properties, rooms, sales, occupancy rate, room
rate. Data are available by location (urban, suburban, highway, airport, resort), room
rate, and size of property. Also, data on customers.

Organization: Building Owners and Managers Association

Series name: Compensation Trends in Commercial Real Estate
Description: Salary and benefit package information on a regional basis for 18
job positions unique to the commercial real estate industry.

Organization: Building Owners and Managers Association

Series name: The Commercial Real Estate Compendium
Description: Provides performance data for 29 cities. Includes information on
market conditions, operating income/expense, and demographic data.

Organization: Building Owners and Managers Association

Series name: BOMA Office Market Review
Description: Published annually in January, this report provides a year-end
overview of U.S., Canadian, and International office market conditions.

Organization: Cohen, Andrew; Arthur Coleman; Eric Deering;

Marie Macri [research paper]
Series name: Leading indicators for the Commercial Real Estate Market
Description: A leading index for the commercial real estate market based on
variables such as: the construction supply price index, employment n finance insurance,
and real estate; unemployment levels in finance and services; initial claims for
unemployment insurance; the number of outstanding real estate loans; bond yields; and
the index of consumer expectations. These components were incorporated into a
principal components modeling system which generated a system of composite indices
for the prediction of movements in the return of the Russell-NCREIF index.

Organization: Economic Research Service

Series name: Farm real estate data
Description: Data on farms, Land in farms, Value of Land and Buildings per
acre, per farm, and total, Building Value, Farm Real Estate Debt, and Farm Real Estate
taxes for the United States and state-by-state.

Organization: Economic Research Service

Series name: Foreign Ownership of U.S. Agricultural Land
Description: The data are presented by state and county. Only those states and
counties in which there is foreign investment in agricultural land are listed.

Organization: Energy Information Administration

Series name: Characteristics of Commercial Buildings
Description: Data on types, number, age, size, location and occupancy of
commercial buildings. Also, data on energy sources, energy uses, heating and cooling
practices, and conservation measures of commercial buildings.

Organization: Equitable Real Estate Investment Management, Inc.

Series name: Value of U.S. income-producing real estate
Description: Estimate of the total value of U.S. income-producing real estate
allocated between institutional and non-institutional owners. For institutional real estate,
there are estimates of the dollar value of equity by class of equity holders and dollar
value of debt by class of creditor.

Organization: F.W. Dodge/DRI Construction and Real Estate Information

Series name: Building stock database.
Description: Provides data on building stock in square feet in specific markets.
Organization: Federal Financial Institutions Examination Council
Series name: Trust Assets of Financial Institutions
Description: Data on assets managed by trust departments of financial
institutions. Includes data on mortgages and real estate assets.

Organization: Hillier Parker

Series name: International Commercial Property Data
Description: Data on rents, yields, and returns for office, shop units, industrial in
85 markets in 32 countries. Also, building costs and cost of finance. Other companies
participating are International Commercial Property Associates, Landauer, and other
real estate research firms.

Organization: Commercial Mortgage Alert

Series name: CMBS (commercial mortgage-backed securities) Monitor
Description: Data on supply and volume of CMBS

Organization: Fisher, Gaffer D., David Geltner, and

R. Brian Webb [research paper]
Series name: Historical Value Indices of Commercial Real Estate
Description: Three indices as follows: (1) an index derived from the Russell-
NCREIF index, (2) a transactions-driven index derived from an hedonic valuation model
estimated using the Russell-NCREIF transactions Database, and (3) a REIT based
index obtained by unleveraging the returns on REITs.

Organization: Institutional Property Consultants, Inc. (IPC)

Series name: IPC Portfolio Index
Description: The index is calculated from the performance returns of
approximately 170 pooled funds, which in the aggregate contain 2,500 properties with
an aggregate value of $35 billion. The index is presented as a total return, as well as the
income and appreciation components of the return, over a range of time periods in their
performance monitoring reports. The Index can be presented before and after advisor
fees on an equally- weighted, nominal basis and on a dollar-weighted, nominal basis. In
addition, the Index can be presented on an inflation-adjusted (real) basis.

Organization: Institutional Real Estate Inc.

Series name: Institutional Real Estate Universe
Description: Database on institutional real estate investors. Provides data on
investment activity of real estate investment managers. Includes data on aggregate
market size (debt and equity), flows of new capital, debt/equity available to invest.

Organization: Internal Revenue Service, Statistics of Income Division

Series name: Corporation Income Tax Returns
Description: Provides data on corporate profit and loss statements and balance
sheets by SIC and firm size. Includes data on real estate industries and data on real
estate activities of non-real estate firms.
Organization: International Council of Shopping Centers
Series name: Shopping Center data
Description: Provides data on: number of centers, leasable retail area, number
of adult shoppers, construction, construction employment, sales, tax revenues from
shopping centers, number of centers by size in square feet, etc. For the U.S. and
various metropolitan areas.

Organization: Korpacz, Peter F. & Associates, Inc.

Series name: Real Estate Investor Survey
Description: Reports results of surveys of real estate professionals. Markets
reported on include shopping centers, central business district office market, apartments
markets and hotel markets, Respondents provide their assessments of rent and
expense growth rates, cap rates, free and clear equity IRRs, marketing time, etc.

Organization: Lehman Brothers

Series name: Lehman Bros. Equity REIT Index
Description: REIT price index based on 97 REITS, available daily

Organization: Lehman Brothers

Series name: Commercial Mortgage Backed Securities
Description: Data on commercial mortgage backed securities, including
issuance by property type, interest rates, and interest rate spreads by rating and
characteristics.

Organization: National Association of Industrial and Office Properties

Series name: Industrial Income and Expense Report
Description: Includes data for the United States, regions, states, and
metropolitan areas. Data provided by property type. Data includes number of buildings,
rentable square feet, average percent occupancy, building location, height in stories,
gross building area, income per square foot, expenses per square foot, Covers 31
metropolitan areas,

Organization: National Association of Industrial and Office Properties

Series name: Compensation Report
Description: A study of the industry's compensation practices, salary levels and
perquisites - nationally, regionally and by the size of company. Includes data by size of
firm and title. Data on average, median, and 75th percentile on base salary and total
compensation.

Organization: Nelson Publications

Series name: Institutional Real Estate Directory
Description: Provides information on the activities of 200 real estate investment
managers (investments by sector, assets managed by class, etc.) assets of 1,700 plan
sponsor investors in real estate, equity and mortgage assets of 1,000 insurance
companies investing in real estate, selected financial data on 200 REITS, and selected
data on 2,000 corporate real estate investors.
Organization: Smith Travel Research
Series name: Hotel occupancy
Description: Database includes information on hotel operations, Includes data
on income, expenses, and occupancy. Uses database of 40,000 lodging establishments
in the United States, Mexico, and the Caribbean.

Organization: Society of Industrial and Office REALTORS

Series name: Comparative Statistics of Industrial and Office Real Estate
Description: An annual report of market Data based on a survey of Society of
Industrial and Office Realtors (SIOR) members. Survey results yield a detailed analysis
for each of over 120 industrial U.S. markets and 111 U.S. office markets. Includes an
analysis of the national scene and each individual market. Data include information on
demographics, market characteristics, dollar volume of sales and leases, sales and
lease prices, rate of new construction, construction costs, vacancy absorption,
expenses, outlook, parking ratios, utility rates, rates of return, etc.

Organization: Torto-Wheaton/CB Commercial

Series name: Commercial Real Estate Vacancy Rates
Description: Monthly data on commercial vacancy rates by geographic region.