Leading the Case-Shiller HPI with Altos Research Housing Market Indicators

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The Altos Research housing market leading indicators provides our clients with a 60-day lead on the Case-Shiller national and regional housing composites. These indicators are available by metro, city, and zip code for use in default risk modeling, RMBS portfolio valuations, whole loan assessments, and LTVs. Contact Scott Sambucci with questions about our market analytics. [scott@altosresearch.com | (415) 931 7942]

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  • Turns out that the residential real estate market is extremely efficient – slow compared to financial markets – but efficient. Transactions are generally grouped by week or month, instead of minute-by-minute. Sellers change the asking prices based on buyer behavior. A seller that sees little or no activity on their listed home will usually respond with a price reduction within a 1-3 month period. Alternately, homes price closer to the buyer strike price will move rapidly off of the market
  • Leading the Case-Shiller HPI with Altos Research Housing Market Indicators

    1. 1. Altos Research Real-Time Housing Market Indicators<br />Leading the S&P/Case-Shiller Home Price Index<br />
    2. 2. Leading the Case-Shiller HPI<br />S&P/Case-Shiller HPI is reported with a 60-day lag, and subject to revision<br />Altos Research real-time housing indicators are compared to:<br />Calendar time event<br />Reported time event<br />Leading indicators provide 2-8 month forecast of trend and magnitude changes in the CS HPI<br />
    3. 3. Supply & Demand Indicators<br />Median Price<br />Asking price of available on-market/active listings.<br />Positively correlated to CS with 3-4 month lead time.<br />Price of New Listings<br />Asking price of each week’s new market supply. <br />Positively correlated with 4-5 month lead time.<br />Price of Listings Absorbed<br />Proxy for sold prices. Properties exit the market, then typically close 60-120 days later.<br />Percent Price Decreased<br />Percentage of active sellers who have take at least one price reduction in most recent 90-day period<br />Negatively correlated with 4-8 month lead time.<br />Inventory<br />Total count of active listings<br />Negatively correlated with 2-6 month lead time.<br />
    4. 4. Additional Leading Indicators<br />Days-on-market (mean & median)<br />Time-on-market to determine future price forecasting period<br />Market Action Index<br />Market absorption rate<br />Percent Relisted<br />Seller psychology indicator. <br />Magnitude Price Decrease<br />Measures amount of seller price reductions<br />Year-on-Year Measures (Price, DOM, Inventory)<br />
    5. 5. Today’s on-market prices lead tomorrow’s transaction prices<br />
    6. 6. Today’s price reduction means lower transaction prices tomorrow…<br />Increasing number of price reductions indicate market weakness ahead - leads to lower future prices.<br />
    7. 7. …While new sellers enter the market to influence future prices<br />
    8. 8. Supply levels affect prices<br />
    9. 9. Seattle (SEXR)<br />
    10. 10. Seattle Price Reductions<br />
    11. 11. Chicago (CHXR)<br />
    12. 12. Chicago Price Reductions<br />
    13. 13. Chicago Inventory<br />
    14. 14. Los Angeles (LXXR)<br />
    15. 15. Contact Altos Research<br />Scott Sambucci, VP Data Analytics<br />O: (415) 931-7942<br />M: (415) 596-0804<br />E: scott@altosresearch.com<br />B: http://blog.altosresearch.com<br />W: www.altosresearch.com<br />

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