Finally, after completing 22 of 24 broker’s licensing classes, I walked away from class tonight with some new knowledge.
Nothing earth-shattering mind you. Just a website. But it’s a cool website, jammed full of data — data that you can download into an Excel spreadsheet, churn a bit, and spit out some interesting charts.
For example, here is a chart showing the home appreciation rates for Arizona since 1976:
No surprise about the stratospheric run up in 2004 – 2005. Interesting to me was the three full years of negative appreciation from 1988 – 1990. What will be most interesting is seeing what happens over the next couple of quarters.
I tried to overlay the same data for the U.S., but it made both data series difficult to see. Here is the U.S. average appreciation for the same time period, on the same scale as the Arizona chart:
Note the U.S. average home appreciation rate has never dipped into the negative side (at least since 1976). The general “shape” of the trend is similar to Arizona’s, though obviously flattened and smoothed — as you’d expect from the shear volume of homes and locations when comparing U.S. based data to a single state.
The Office of Federal Housing Enterprise Oversight uses what they term as the Housing Price Index (HPI), which uses a weighted-repeat sales (WRS) methodology that, in a nutshell, looks at repeat transactions (including re-fi’s) of the same property over time, as opposed to simply gathering single sale numbers as many indexes do. This method should provide a more accurate assessment of true home appreciation. If you really want to know more about the WPS method, here is a 15 page PDF file that explains it in detail, including cool math like:
and stuff I haven’t heard since my second semester of college statistics (or was it Calc II?) like:
The standard assumption that the error variance of the (log) change in house value is proportional to the length of time between repeat transactions was modified to allow for a diminution of the rate of increase in volatility through the use of a quadratic function of time.
Whew. I never really enjoyed either of those classes. I do however enjoy seeing real math and statistics applied to real estate market analysis.
There’s a TON of data at this site, including MSA (Metropolitan Statistical Areas) details which may provide data for some more localized Phoenix real estate market analysis. The former semiconductor engineer in me is stoked. Stay tuned…
[tags]home appreciation, Office of Federal Housing Enterprise Oversight, HPI[/tags]