WASHINGTON — Homebuyers, sellers, small investors and realty agents are about to get new tools that purport to show where local property values are headed: the first “house specific” monitors for consumers that can track price trends — and forecast them up to one year into the future — on 50 million single-family homes across the country.
The service already is commercially available to hedge funds and mortgage investors who purchase large quantities of data to guide their investment decisions. Its developer is Allan Weiss, who co-founded and was CEO of the company that pioneered the iconic “Case-Shiller” price index of major metropolitan markets that is widely cited as a barometer of the housing sector’s health.
But unlike Case-Shiller, which reports on price trends in roughly 5,000 ZIP code areas, Weiss Residential Research tracks individual houses in most neighborhoods nationwide. Weiss said the company expects to add another 20 million houses to the current 50 million total as it continues to gather data on key characteristics from interior living space to tax assessments, mortgage balances, age of home, appraisal information and others. Weiss holds multiple patents on the statistical techniques and technology underpinning the company’s research and products.
The new house-specific indexes for consumers will not provide current property valuations or cover condominiums and cooperatives. Rather, they’ll offer graphic displays of how prices on individual homes have moved — up, down, sideways — over a period of recent years in relation to an index. Later this summer, Weiss Residential will publish “weather reports” on price trends in major metropolitan markets on its website, www.weissres.com.
The site already provides sample dynamic “heat maps” for eight large markets — Southern California, Miami, Chicago, Las Vegas, Atlanta, San Francisco, New York and Phoenix — that show how prices on individual homes rose and fell in the boom years leading up to the bust in 2006-07, and how they have performed since. The month-by-month movements almost look organic, with price declines spreading like a disease from one neighborhood to another, then reversing course during the recovery.
In an interview, Weiss said a close inspection of the heat maps reveals how “canary in the coal mine” houses were predictors of important changes in pricing trends getting underway — subtle early moves signaling the shift from boom to crash, then on to recovery — that were not otherwise detectable or known to consumers in the marketplace at the time. Buying or selling real estate without house-specific monitors in those years, he suggested, was the equivalent “of setting sail before a hurricane” with no advance weather warnings, no satellite photos of emerging meteorological conditions.