Collateral Analytics Extends Home Price Forecasting Models

Posted by Patrick Barnard on September 21, 2015 No Comments
Categories : Residential Mortgage

Collateral Analytics, a provider of automated valuation solutions and real estate analytic products, has added shorter-term market-based home price indicators to its Home Price Forecasting Models, in addition to the longer-term economically based drivers that are currently used.

According to the company, long-term home price forecasts can be explained by fundamentals such as employment, income and interest rates; however, the new two-equation model improves the predictive power and forecasting ability of the shorter-term forecasts, as well.

The new shorter-term indicators include the available inventory of homes for sale, turnover rate and Collateral Analytic's proprietary Market Condition Index.

‘We have found that these shorter-term market-based indicators do a much better job of identifying turning points in real estate price cycles,’ says Michael Sklarz, president and CEO of Collateral Analytics. ‘In addition, these indicators did a much better job of predicting the magnitude of both the price bubble and subsequent crash [that] occurred in the 2004 to 2009 period compared to more traditional models.’

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