The Sensitivity Analysis of the FHA Technique of Housing Market Analysis: The Effect of Ratios and Variables, and Their Perturbations on Family and Elderly Demand Estimates

Abstract

This paper applies the sensitivity analysis to the Federal Housing Administration's (FHA) techniques for reviewing family and elderly housing market conditions through the perturbations of its fundamental parameters. Models are presented for estimating the demand on the family and the elderly housing, and empirical illustrations for the practitioners of a housing market analysis are indicated. We elevate the FHA technique from a descriptive level within an engineering paradigm that did not change for over half a century to an evolutionary statistical model. Housing market analysts will find the model a useful supplement to their regular operations in terms of the diagnostic checks for their estimates.