Zillow’s “secret” dataset that can help you predict home price trends.
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Percent of Homes Increasing in Value
Zillow’s Increasing Values (%) vs. Case-Shiller Index
Compare Zillow’s “Percent of Homes Increasing in Value” to the “Case-Shiller Home Price Index” to get a feel for whether it’s a good leading indicator of future home price trends.
Even in a market with rapidly rising home prices, not all homes will be rising in price. By looking at the percentage of homes that are increasing in value, you can get a better feel for the strength of any price trend, whether increasing or decreasing. Detailed explanation here.
“Percent of Homes Increasing in Value”
Zillow publishes a little known dataset called “Increasing Values (%).”
“Increasing Values (%): The percentage of homes in a given region with values that have increased in the past year.”
Essentially, Zillow’s “Increasing Values Percentage” shows the percentage of homes in a given area with “Zestimates” that have increased in the past year.
Looking at the graph, it seems that when the percentage of homes with increasing values is high (above ~66%) or is increasing fast (up several percentage points in a month), home prices tend to increase – or continue to increase – in the future.
The opposite is true for decreasing home values. When the percentage of homes with increasing values is low (less than ~33%) or is falling fast, home prices tend to fall.
The “Percent of Homes Increasing in Value” isn’t a killer metric but it looks useful. I would say, for example, that changes in the number of homes sold or changes in the number of homes for sale are better leading indicators of future home prices. This “secret” metric, however, provides additional, helpful information. It would certainly make me more confident in a forecast, if it moved in the same direction as the sales story and the supply story.