Wednesday, May 02, 2007

Interactive Heatmap Housing Over/Under-Valuation q4 2006

click on the headline to start the interactive map.

bitte auf die überschrift klicken um die interaktive karte zu starten

on top of that National City has put up a detailed report. please take into account that the downtrend has acclerated since q4, so the real picture is worse.....

zusätzlich gibt National City noch einen detailierten report heraus. . das realle bild dürfte somit noch schlechter aussehen (gerade wenn man bedenkt das sich die talfahrt seit jahreswende beschleunigt hat).

This study employs a statistical technique — pooled time series regression analysis — to evaluate single family house prices in 317 metro areas. These 317 areas collectively account for 77 of all existing single family housing units and 86 percent of all related real estate value, as of the fourth quarter of 2006. (link methodology pdf)

• For the period from Q1/1985 to Q4/2006, price-to-income ratios are statistically explained by four factors: household population density, mortgage interest rates, relative income levels and characteristics unique to the history of each metro area.

• The model accounts for 77 percent of the variation in house price-to-income ratios over time and across the 317 metro areas. Explanatory variables are statistically significant with high levels of confidence.

here the link to the report (pdf)

here you can see how the s&p/case-shiller futures are heading south.....

hier gibt es den link um die aktuellen s&p/case-shiller futures zu sehen...

thanks to DaveDonhoff and the !

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Blogger Lou Minatti said...

I disagree with these maps. Houston is way "undervalued" according to these maps, yet there's been overbuilding here, same as elsewhere. Housing prices may not fall as much, but they still will fall.

5:44 AM  
Blogger jmf said...

thanks lou.

this is odd.

but i think they have at least the coasts right.

6:00 AM  
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Anonymous NC Jim said...

Coastal NC is shown as 41% overvalued but the truth is more complicated than the model. This is a retirement destination with basically two RE markets - one for the "locals" which has not appreciated that much and one for the retirees (mostly from the Northeast) which is much newer and more expensive. Price/income ratios are meaningless since the retirees are bringing in equity from higher priced regions. Retirees also tend to be high net worth individuals. Looking at the map, much of the overvaluation seems to be in similar retirement destinations. The retirement of the baby boomer generation is going to skew many statistical models and past "rules of thumb".

Hot today on the coast.


1:08 PM  
Anonymous har said...

Please correct my math if im wrong.

if you are 50% overvalued on your house 'worth' $100,000 then in order for it to correct to 0% overvalued (not overvalued) the value should change to $50,000???

And 100% overvalued means true value is zero?

6:31 PM  
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5:51 AM  
Anonymous Math_Gal said...


The percent over valued would refeer to a percent of the 'true' value, rather than a percent of the what it is supposedly 'worth' now.

The math is as folows. To find the true value Divide the current price by 1 + the percent over valued (in decimal form). So using your example:

50% over valued supposedly 'worth' $100k
$100k/1.5 = $66.7k of 'true' value.

If the house were 100% over valued then:
$100k/(1+1)= $50k of 'true' value.

Hope that helps.

8:32 AM  

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