Go straight to current “Homes Increasing in Value” charts.
[This post just got a nice mention in The Washington Post! Awesome!]
Can this “secret” data help you predict future home prices?
“Percent of Homes Increasing in Value”
Here’s the concept. Even in a market with rapidly rising home prices, not all homes will be rising in price.
• Maybe homes on the outskirts of town are falling in value while most of the rest of the market is rising in value.
• Maybe luxury homes are falling in value while most of the less expensive homes are rising in value.
Whatever the reason, a rising metropolitan home price doesn’t mean all homes in the metro area are rising in price.
By looking at the percentage of homes that are increasing in value, you can get a better feel for the strength of any price trend whether increasing or decreasing.
That’s the concept anyway.
Zillow’s Increasing Values (%) vs. Case-Shiller Index
Full-size, interactive version
FYI, you can see the Case-Shiller numbers for different metros on the same chart here.
Zillow publishes a little known dataset called “Increasing Values (%).”
“Increasing Values (%): The percentage of homes in a given region with values that have increased in the past year.”
I can’t find any current graphs or tables on Zillow.com that use “Increasing Values (%).” Perhaps they used to use it or they use it as a component to calculate market strength or something. Nevertheless, Zillow is still updating the published dataset monthly.
Introduction. I first became intrigued with this concept – that the percentage of homes increasing in price can give you clues about future market and price trends – when I read Weiss Analytics promoting it.
Cool concept. It was a cool concept but I needed to see some time series data to decide whether it actually foreshadowed home price changes. Weiss Analytics doesn’t publish their time series data so I couldn’t check it out.
New data! Yea! Then one day while geeking out on all the raw data Zillow publishes (which I originally learned about via CalculatedRisk), I noticed that Zillow publishes a dataset that conceptually seemed the same as the one promoted by Weiss Analytics. With the discovery of this “secret” dataset, I felt like the Indiana Jones of real estate data geeks. 🙂
Percent of Homes Increasing in Value
Like Weiss Analytics, Zillow estimates the value of pretty much every home in a market. Zillow calls their individual home value estimates “Zestimates.”
Zillow’s “Increasing Values Percentage” dataset shows the percentage of homes in a given region with Zestimates that have increased from a year earlier.
If you follow Real Estate Decoded, you know I’ve spent a lot of time detailing the accuracy/inaccuracy of individual home Zestimates, such as here and here.
Ballpark. The “Increasing Values (%)” dataset will have a bunch of accuracy issues as well, just like Zestimates or any other home value estimates. But like Zestimates, “Increasing Value (%)” gives you a nice ballpark estimate of what’s really happening on the ground.
The Mechanics of Home Price Increases
Looking at the graph, it seems that when the percentage of homes with increasing values is high (above ~70%) or is increasing fast (up several percentage points in a month), home prices tend to increase – or continue to increase – in the future.
The opposite is true for decreasing home values. When the percentage of homes with increasing values is low (less than ~30%) or is falling fast, home prices tend to fall.
Can we use this to help predict future home price trends?
Economists follow a bunch of things related to supply and demand but the only thing most people want to know is the last thing that changes, home prices.
I think the “Percent of Homes Increasing in Value” will sometimes show you that home prices are strengthening or weakening before home prices actually change.
I just don’t know yet when it works and when it doesn’t.
Takeaway. The “Percent of Homes Increasing in Value” isn’t a killer metric but it has potential. I would say, for example, that changes in the number of home sales or the supply of homes for sale are better leading indicators of future home prices. This “new” metric, however, provides additional, helpful information. It would certainly make me more confident in my forecast, if it moved in the same direction as the sales story and the supply story.
Next step. I’m going to follow “Percent of Homes Increasing in Value” for a while to see if it lets me get a better feel for where the Case-Shiller Home Price Index is headed.
For my detailed discussion of the usefulness of the “Percent of Homes Increasing in Value,” watch the video above.
Feel free to leave a comment. I’m interested in your opinion on this, particularly if you have an idea why in several cities the metric went from going steeply down in 2014 to steeply up in 2015.
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3 Responses to Zillow’s "Percent of Homes Increasing in Value" Dataset and Forecasting Prices
After losing 100+% of our life time savings and investment in a home outside Las Vegas, NV we built in 2007 that depreciated 62% … we finally, after five years found a greater fool and sold above value. No bankruptcies .. but totally ruined FICOs that went rom 810 to 500s. We immediately left the US and spent three years paying off credit card debt. I no longer believe in American banks, or the American predatory capitalistic system as it exists now, and will never own an American home. We live debt free in Thailand where the middle class is growing, unlike back where you are. Wish you well.
Great find here John! This indicator is very similar to other stock market indicators which show sentiment, example http://stockcharts.com/h-sc/ui?s=$SPXA50R&p=D&yr=4&mn=0&dy=0&id=p23236955128&a=293082490. I think it will best to combine Increasing Values (%) and Decreasing Values (%) to better gauge sentiment. Overall very good insight with these indicators.
[…] More details on this dataset here and here. […]
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