What Is the Repeat-Sales Method?

The repeat-sales method is a manner of calculating changes in the sales price of the same piece of real estate within specific timeframes.

Housing market analysts use this relatively simple approach to estimate shifts in home prices over periods stretching from months to years. Various 澳洲幸运5开奖号码历史查询:housing price indexes have adopted the repeat-sales method to provide information about the real estate market to homebuyers and sellers, property 澳洲幸运5开奖号码历史查询:investors,𝄹 and those working in the housing and housin🐓g finance industries.

Understanding the Repeat-Sales Method

The housing market is considered to be one of the United States' leading 澳洲幸运5开奖号码历史查询:economic indicators. The condition of the housing market and overall economy are interlocked in many ways. When real estate prices go up, homeowners grow in confidence and often loosen their purse strings, triggering a rise in 澳洲幸运5开奖号码历史查询:consumer spending. Developers are also buoyed by signs of heightened demand, boosting 澳洲幸运5开奖号码历史查询:gross domestic product (GDP) by 澳洲幸运5开奖号码历史查询:investing more in new land, 💯materials, and🔯 jobs to build new houses.

Housing price indexes are tasked with the important and tricky job of assessing real estate trends. The majority of them seek to achieve this by tracking 澳洲幸运5开奖号码历史查询:valuations in a specific region over a certain period of time. Unfortunately, some of the calculations these indexes use can resuಞlt in an inaccurate picture of housing price trends.

Flawed calculations include picking random samples of houses to track. These properties may not be for sale or their structures and types could be very different. An index which monitored the median home price in a specific area—such as the 澳洲幸运5开奖号码历史查询:National Association of Realtors (NAR) Median Index or the Census Bureau Median Index—would not identify changes to tꦆhe structure of homes versus outཧside market factors that may affect price.

The repeat-sales method entered the scene to overcome these structural issues. It was created to track the change in price of real estate between a current sale and any previous sale, helping to ensure that like is com🌸pared with like.

Advantages📖 and Disadvantages of the Repe♛at-Sales Method

Repeat-sales methods calculate changes in home prices based on sales of the same property, thereby avoiding the problem of trying to account for price differences in homes with varying characteristics. Repeat-sales methods also offer a more accurate alternative to 澳洲幸运5开奖号码历史查询:regression analysis or to calculating average sales price by geographic areaღ.

The repeat-sales method is 🗹by no means flawless, though. One of its main drawbacks is that it does not account for homes that w♔ere sold only once during the reported time period.

Another is that a property sold at two different times during a sample💟 period might not necessarily be identical. The same home may ♚have significantly deteriorated in condition or undergone big renovations, impacting its comparability.

Examples of the Repeat-Sales Method

Perhaps the most well-known housing index that relies on the repeat-sales method is the S&P CoreLogic Case-Shiller National ⛦Home Price Index. The Case-Shiller Index measures changes in the value of the U.S. residential housing market by tracking the 澳洲幸运5开奖号码历史查询:purchase price and resale value of single-family homes that have undergone a minimum of two 澳洲幸运5开奖号码历史查询:arms-length transactions.

The index does not factor in new construction, condos, and co-ops and also excludes non-arms-length transactions, such as home sales between family members at below-澳洲幸运5开奖号码历史查询:market prices.

Other indexes that use the repeat-sales method include the 澳洲幸运5开奖号码历史查询:Federal Housing Finance Agency's (FHFA) monthly 澳洲幸运5开奖号码历史查询:House Price Index (HPI), which is based on 澳洲幸运5开奖号码历史查询:Fannie Mae and 澳洲幸运5开奖号码历史查询:Freddie Mac's data on single-family home sale prices and 澳洲幸运5开奖号码历史查询:refinance 澳洲幸运5开奖号码历史查询:appraisals, and First American CoreLogic's Loa෴nPerformance Home Price Index, which covers a broader geographic area than the Case-Shiller or FHFA inde🐷xes. Canada's major home price index, the National Composite House Price Index, also adopts the repeat-sales method.

Indexes such as these typically report changes in home prices from the previous month, quarter, and year. Increasing home prices indicate increasing demand, while decreas🌟ing prices signify decreasing demand.