BAM Key Details:
- Quantarium’s TerraIndex™ HPI challenges the traditional notion of waiting months to gauge home price trends by providing critical market insights within days.
- TerraIndex™ HPI’s faster reporting turnaround sets it apart from conventional Home Price Indexes like Case Shiller, CoreLogic, and Black Knight.
The Conventional Lag in Home Price Reporting
Traditionally, the real estate industry waits anywhere from 30-60 days for Home Price Indexes (HPIs), whether from Black Knight, CoreLogic, or the S&P/Case-Shiller HPI.
For example, in February of this year, there was a shift in the housing market, when a seven-month-long trend of home price depreciation reversed. The Case-Shiller Home Price Index wasn’t released until April 25, approximately seven weeks later, showcasing the reversal.
The Quantarium’s TerraIndex™ HPI was released March 8, only eight days after the month ended.
Quantarium’s TerraIndex™ HPI has existed for several years, serving as a component of the company’s proprietary Automated Valuation Model (QVM). This AVM is widely utilized by lenders and various institutions throughout the United States, providing estimates for over 100 million residential properties in the country.
This year, after watching the ups and downs of the housing market since 2020, it started to release its HPI to the public — with a much faster turnaround than other models.
TerraIndex™ HPI vs. Case-Shiller
According to John Smintina, Ph.D., Chief Analytics Officer and Quantarium Co-Founder, the difference in reporting time between Case Shiller and Quantarium’s TerraIndex™HPI is attributed to their respective methodologies. The Case-Shiller Index relies on repeat sales data and presents a three-month moving average, leading to a two-month lag in reporting HPI results for a specific month.
On the other hand, Quantarium employs a more frequent approach. It recomputes estimated values for the entire national area on a weekly basis and generates HPIs at various geographic levels, including State, County, CBSA, Zip Code, and Census Tract. Quantarium leverages its industry-leading Data Services Platform (QDSP) to facilitate this rapid processing.
As a result, Quantarium’s TerraIndex™ HPI report for a specific month is usually available on the second Wednesday of the following month. For example, the HPIs for May and June were made public on June 14 and July 12, respectively.
The TerraIndex™ HPI report shares numerous similarities with other national HPI-based reports that monitor house prices and trends, like the Case-Shiller National Home Price Index, the Black Knight Mortgage Monitor Report, and the Core Logic indices. These reports all rely on vast amounts of mortgage, public records, and MLS data as the basis for their analyses. Because of these similarities, all four models highlight the same trends:
Certainly, Quantarium is not saying that Case Shiller is not a good model. Indeed, it is. But, with the volatility in housing markets, lenders, financial managers and consumers alike need to know the direction in which they are headed a lot sooner.
The national home price indices exhibit a consistent pattern in both charts during Q1 2023. Year over year, prices are rising, but the rate of increase is gradually slowing down each month. Month over month, non-seasonally adjusted prices experienced a significant change, breaking away from their seven-month-long negative trend in February 2023 and showing accelerated growth in March.
Importance of Recency in Housing Market Reports
The demand for market reports that are both up-to-date and accurate is more crucial than ever. Industry professionals rely on precise information to make informed decisions. A lag in reporting can lead to missed opportunities or ill-timed decisions, potentially resulting in financial losses or missed chances to capitalize on favorable market conditions.
There is a need for accuracy in market reports. Only accurate data can lead to accurate assessments. But, in today’s fast-paced market, waiting for those accurate reports can also create issues.
This reality of having to wait for Q2 results reinforces our perspective on lost business and consumer informed decisioning, and underscores our decision to release this data. While these four HPIs generally end up telling the same story, one of them is clearly doing so much, much earlier. In that sense, consumers of our TerraIndex™ HPI are ‘always the first to know’.