Photo Credit: Garry Knight
Accuracy close and comes in a month earlier than NAR
Housing reports are not known for their timeliness as the indicators and indices can be based on data that is weeks or even months old. Online real estate marketplace Auction.com is looking to change this. Google Capital, an equity fund, announced that it would invest $50 million in Auction.com, causing housing industry watchers to wonder why Google would sink cash into an online real estate auction company. It’s now clear that it’s all about the data.
Auction.com is launching a monthly report, called the “Nowcast”, which is claimed to predict home sales up to a month faster than the National Association of Realtors (NAR).
Rick Sharga, Executive Vice President of Auction.com said, “This is as close to real-time data as you can get. We’re looking at search traffic that is taking place that month—and really right up to the day of the ‘Nowcast’—to interpret what’s going on in the market.”
Auction.com, in addition to reporting existing home sales, will add predictions for home pricing trends and new-home sales close to the middle of each month.
“Auction.com’s ability to deliver timely analysis of current market conditions can provide critical insight and enhanced predictability to industry professionals, economists and government entities alike,” said Sharga.
Google’s Chief Economist Hal Varian, defines this type of data modeling as “contemporaneous forecasting” or the ability to predict what is happening as it’s happening.
Varian wrote, “Google Trends data—publicly available search information—offers valuable insights into current economic and consumer trends.”
Auction.com layers its data over Google’s search to come up with the home sales forecast. This is done by analyzing certain aspects of search traffic that pertains to people searching for and buying homes.
Sharga said, “Then based on the relationship we’ve seen between that search behavior and real estate purchases, we can predict what that month’s activity is going to look like.”
Financial services companies, real estate professionals, investors and government entities could consider getting this real-time housing data advantageous as knowledge is power. The company said that internal testing have shown “considerable accuracy” in its ability to predict market performance; but stop short on claiming the modeling as being exact. They say their numbers nearly mirror the actual NAR numbers, usually beating consensus forecasts.
Adam DeSanctis, a spokesperson for the NAR said, “We’ll keep our eyes on it. We’ll review it. We stick by our data and believe it is the most representative of the market.”
Resources:
25 CNBC. Google’s new data play: Predicting home sales
Inman News. Auction.com teaming up with Google to offer real estate ‘Nowcast’