There's no shortage of data on America's housing market. Analysts constantly review new and existing home sales, building permits, available housing units, and other metrics to gauge the health of the market and to assess its likely direction. ATTOM Data Solutions, a national property data warehouse with information on 150 million U.S. properties, adds another metric to the list the Pre-Mover Housing Index.
Most real estate data involves transactions that have already taken place, but the Pre-Mover Housing Index is predictive in nature. Using purchase loan application figures from its massive database, ATTOM Data Solutions calculates a Pre-Mover Housing Index to predict the likely volume of residential real estate transactions within the next 30 to 90 days in a given market. The data is normalized to produce a baseline index number of 100 as an average market. Higher numbers indicate a greater likelihood of home sales, while numbers below 100 indicate lower-than-average activity.
According to ATTOM Data Solutions, the formula has been verified by historical pre-mover data. Since the first quarter of 2014, 59% of homes identified as pre-movers in any quarter sold within 30 days of the estimated date of loan settlement, and just over three-quarters (76%) sold within 90 days.
Where does the current Pre-Mover Index see the greatest activity in Q4 2017? Out of the 123 metropolitan areas that were analyzed, the top five markets in the third quarter index were Colorado Springs, CO; Manchester/Nashua, NH; Chicago, IL; Washington, DC; and Nashville, TN. All have index values of 196 or higher. Colorado Springs and Washington, DC, are particularly active markets, since they also appeared in the top five of the previous Pre-Mover index.
At the other end of the scale, expect a limited fourth-quarter market in Rochester, NY; Akron, OH; Myrtle Beach, SC; Providence, RI; and Cleveland, OH. Their Pre-Mover Index values range from 35 to 52, well below the benchmark of 100.
The Pre-Mover index also contains analysis at the county level. Generally, this will correlate to the metropolitan area readings, but there are exceptions. For example, San Mateo County in California, located in the San Francisco Bay Area, has one of the lowest third-quarter county index values but does not rank equally low among the metropolitan areas. San Francisco did have the lowest Pre-Mover index in the previous quarter, indicative of an unaffordable market that depresses real estate activity.
Daren Blomquist, Senior Vice President at ATTOM Data Solutions, notes that two factors tend to predict real estate activity "markets with plenty of available jobs, along with a reasonable supply of homes for sale." The monthly supply of homes is at a 4.9-month inventory nationally, well below the 6-month supply of a healthy market. Enclosed local markets like San Francisco, where the inventory is closer to a 2-month supply, have a challenging time competing in the Pre-Mover Index with suburban counties and other outlying areas, regardless of how many jobs they create.
For most of us, the Pre-Mover index doesn't change our moving destination it just indicates how difficult of a time we will have finding a suitable home in that market, and how likely it is that offers will need to be relatively high to secure a home purchase.
Resist the urge to overpay based on current market conditions. Greg McBride, Chief Financial Analyst for Bankrate.com, advises, "To make sure you don't get in over your head, try not to pay more than three times your annual income for a house." If your dream house runs over that amount, consider how you can raise your income, cut back spending in other areas to compensate, wait for a better market condition or scale back your dreams a bit. Another house may check off the majority of your "must haves" without placing you in financial distress.
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Originally Posted at: https://www.moneytips.com/where-are-people-buying-homes/450
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