Real Estate markets are inefficient and involve non-homogenous assets being negotiated and purchased by private parties. It becomes difficult to track data since conditions of sale, financing, and property rights being sold, among other things, can not be easily verified.
However, there are more and more sophisticated indices published by various companies that try to give a more accurate picture of the housing market. I wrote about the OFHEO and the S& P Case-Shiller Indices last week and have summarized a few other interesting indices here.
It is fascinating seeing how different analysts deal with issues of data analysis through varying methodologies. Each index provides a different glimpse of the housing market. I would recommend investigating the merits of each approach. Learning how to run multi-regression analysis, hedonic models, dummy variables etc. can give you greater nuance and insight on your local market.
Integrated Asset Services provides full service asset management solutions. There IAS360 House Price Index measures the monthly change in median house sales nationwide, regionally, and in 360 countries. Data is included from all transactions that meet their “arms-length” criteria. Data is filtered and cross referenced in ensure accuracy. They aggregate “micro-geographies characterized by 400 scaled and weighted social, economic, geographic and housing attribute dimensions.” This index is published monthly, with a lag of one month.
PMI US Market Risk Index quantifies the probability that homes prices decline in two years for each metropolitan statistical area and division. Factors which are analyzed include economic, housing, appreciation, employment, affordability, excess housing supply, interest rates, and foreclosure activity.
MIT/CRE Housing Affordability Initiative (HAI) attempts to provide a more accurate measure of affordability than the National Association of Realtors’ Housing Affordability Index. They take into account access to employment, quality of schools, and environmental amenities associated with a given location, in addition to more traditional measures. The premise is that the traditional use of the ratio of median monthly housing costs to income fails to take into account critical differences in affordability. Different indices can be constructed to reflect different costs in different sized households. Information is taken from rental and owner-occupied stock from the 2000 Decennial Census and updated stock information from the Warren Group and several state agencies.
The National Association of Home Builders have published a variety of indices based on NAHB surveys. The NAHB-Wells Fargo Housing Market Index (HMI) reflects the single-family housing market each month while the Housing Opportunity Index (HOI) measures home affordability. The Multifamily Market Index (MMI) provides more refine information to an often neglected Real Estate sector. They can be broken down into Rental and Condo components (MCMI and MRMI).
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Article Author: Anwell TsaiAnwell has written 16 articles for us.
Visit Anwell's Website: http://www.ValuationHome.com
Anwell Tsai, a Realtor for Real Estate One, grew up in the Real Estate business. Anwell is extremely interested in analyzing property from a variety of viewpoints, utilizing different financial models. He explores various issues in Real Estate on his blog at ValuationHome.com. When he is not out looking at homes, Anwell, a conservatory trained violinist, loves expressing his creative side through the joys of music.
Joshua Dorkin
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thank you
Nice summary of indexes. I’ve been following IAS360 (http://iasreo.com/ias360update.html) and have noticed it’s the only one that analyzes at the neighborhood level. Lately they have been reporting small gains at the neighborhood and county level which reveals the pockets of hope for the housing industry. This index digs deeper than other house price index allowing for closer analysis of the situation. If I’m not mistaken, Case Schiller only analyzes at the MSA level which can overlook many variables.
Lately they have been reporting small gains at the neighborhood and county level which reveals the pockets of hope for the housing industry. This index digs deeper than other house price index allowing for closer analysis of the situation. ” i like it. nice post thank you