Glad that you like the work, FSD. Good that you quickly recognize ‘manna from heaven’ during a pricing trough (i.e., that a $200/month premium is nothing for owning a home compared to renting a townhome; we moved from renting a condo to renting a home, and the rental premium is $1,000/month).
PS, I hate repeating myself, repeatedly; please see Caveat 3 and the first line of my response to you this morning, both above. For the third time: this model predicts the future trough price, only. The predictors for peak prices are different. We’re past the peak. I don’t care about the peak. The peak is ancient history. I’m solely interested in identifying the next trough, though it is years away.
FSD, I agree that the predicted prices are noisy, because the data that the model uses — NODs, employment, and deseasonalized sales — are noisy (i.e., move up and down month to month). Averaging, or buying on a 5%/6% trigger, as you suggest, may be useful. My model shows:
— Predicted trough price occurs in July 1995 at $165K. Actual trough price occurred in December 1995 at $163K.
— 5% above predicted trough price (of $165K) occurs in November 1995 (predicted November price = $173K, actual November price = $167K).
— 6% above predicted trough price (of $165K) occurs in August 1996 (predicted August price = $176K, actual August price = $174K).
