spb/wp16_uqo

1% ============================================================================2% UQO Working Paper Template — Economics / Finance3% ============================================================================4\documentclass[12pt,letterpaper]{article}56% --- Encoding & Language ---7\usepackage[utf8]{inputenc}8\usepackage[T1]{fontenc}9\usepackage[english]{babel}1011% --- Page Layout ---12\usepackage[13  letterpaper,14  top=1in,15  bottom=1in,16  left=1in,17  right=1in18]{geometry}1920% --- Typography ---21\usepackage{mathptmx}          % Times-like font (text + math)22\usepackage{microtype}         % Improved typographic refinements23\usepackage{setspace}24\onehalfspacing                % 1.5 line spacing2526% --- Math ---27\usepackage{amsmath,amssymb,amsthm}2829% --- Tables ---30\usepackage{booktabs}31\usepackage{tabularx}32\usepackage{multirow}33\usepackage{threeparttable}34\usepackage{siunitx}35\sisetup{36  input-symbols = {()},37  table-format  = -1.3,38  parse-numbers = false39}4041% --- Figures ---42\usepackage{graphicx}43\usepackage{subcaption}44\graphicspath{{figures/}}45\usepackage{float}4647% --- Colors & Links ---48\usepackage[dvipsnames]{xcolor}49\usepackage[50  colorlinks  = true,51  linkcolor   = NavyBlue,52  citecolor   = NavyBlue,53  urlcolor    = NavyBlue,54  breaklinks  = true55]{hyperref}56\hypersetup{pdftitle={Does the Sales Comparison Approach Actually Work? A Large-Scale Point-in-Time Validation of Comparable Selection, Price Adjustments, and Value Reconciliation}, pdfauthor={Simon-Pierre Boucher}}5758% --- Bibliography ---59\usepackage[authoryear,round,semicolon]{natbib}60\bibliographystyle{aer}6162% --- Captions ---63\usepackage[64  font       = small,65  labelfont  = bf,66  labelsep   = period,67  justification = justified,68  singlelinecheck = false69]{caption}7071% --- Headers & Footers ---72\usepackage{fancyhdr}73\pagestyle{fancy}74\fancyhf{}75\renewcommand{\headrulewidth}{0pt}76\fancyfoot[C]{\thepage}7778% --- Section Formatting ---79\usepackage{titlesec}80\titleformat{\section}{\large\bfseries}{\thesection.}{0.5em}{}81\titleformat{\subsection}{\normalsize\bfseries}{\thesubsection.}{0.5em}{}82\titleformat{\subsubsection}{\normalsize\itshape}{\thesubsubsection.}{0.5em}{}8384% --- Appendix Support ---85\usepackage[toc,page]{appendix}8687% --- Misc ---88\usepackage{enumitem}89\setlist{nosep,leftmargin=*}9091% ============================================================================92% METADATA — Edit these fields for each working paper93% ============================================================================94\newcommand{\WPnumber}{16}95\newcommand{\WPtitle}{Does the Sales Comparison Approach Actually Work? A Large-Scale Point-in-Time Validation of Comparable Selection, Price Adjustments, and Value Reconciliation}96\newcommand{\WPsubtitle}{Evidence from 391,000 Single-Family Transactions in Quebec, 2021--2026}97\newcommand{\WPdate}{October 2026}98\newcommand{\WPversion}{1.0}99\newcommand{\WPabstract}{%100  The sales comparison approach is the dominant method of residential valuation, yet its operating rules---how many comparables to use, how far and how far back to search, which adjustments to apply, how to weight and reconcile---rest largely on professional convention. We subject these rules to a large-scale, point-in-time backtest on \nSalesClean{} arm's-length single-family transactions in Quebec (2021--2026) matched to the municipal assessment roll. For each of \nTargetsAll{} target sales in 2024--2026, the price is masked and \nConfigs{} configurations of the approach---together with hedonic, gradient-boosting, assessment-ratio and hybrid benchmarks---are applied using only information available on the valuation date; configurations are selected on 2024 and evaluated out of sample on 2025--2026. Adjustments dominate: the median absolute error of the five nearest sales falls from \mdapeMtwo{} with a time adjustment only to \mdapeMseven{} with a hedonic adjustment grid, and a stylized conventional grid captures most of that gain. Selecting physically similar rather than merely nearby comparables delivers a comparable gain without any adjustment. The optimal number of comparables is well above the conventional three---around twenty once a grid is applied, with no penalty up to fifty---and short time windows are dominated; the search radius matters far less than the number and similarity of the sales retained. Weighting and reconciliation rules matter little. The best transparent configuration chosen in 2024 reaches \mdapeMzero{} out of sample, against \mdapeMelevenB{} for a quarterly-retrained gradient-boosting model that uses the assessed value and \mdapeMtwelve{} for a hybrid; the cost of transparency is small and narrows in homogeneous submarkets. Accuracy is governed primarily by submarket liquidity; a wide-net rule that retains the most similar sales is self-adapting, and stratum-specific rules do not improve on it. The results turn a convention-based method into a set of empirically validated, reproducible rules.101}102\newcommand{\WPkeywords}{sales comparison approach, comparable selection, adjustment grid, automated valuation models, hedonic pricing, backtesting, residential real estate, Quebec}103\newcommand{\WPjel}{R31, R32, C52, C53, G12}104105% --- Author ---106\newcommand{\WPauthor}{Simon-Pierre Boucher}107\newcommand{\WPaffiliation}{%108  Département des sciences administratives\\109  Université du Québec en Outaouais%110}111\newcommand{\WPemail}{simon-pierre.boucher@uqo.ca}112\newcommand{\WPaddress}{%113  Gatineau -- Pavillon Alexandre-Taché\\114  283, boulevard Alexandre-Taché\\115  Gatineau, Québec, Canada J9A 1L8%116}117118% ============================================================================119% DOCUMENT120% ============================================================================121\begin{document}122123% --- Title Page ---124\input{tables/numbers}125\input{sections/titlepage}126127% --- Main Body ---128\input{sections/introduction}129\input{sections/literature}130\input{sections/data}131\input{sections/methodology}132\input{sections/results}133\input{sections/robustness}134\input{sections/conclusion}135136% --- References ---137\newpage138\bibliography{references}139140% --- Appendix ---141\input{appendix/appendix}142143\end{document}144