Tuesday, June 12, 2018

Broward County, FL Housing Market Shows Bullish Uptrend

- Intended for Students/New Analysts to Learn Analytics -

(Click on the image to enlarge)

The Median Sale Price trended up sharply from $275K to $320K in first half of 2017, trending down equally rapidly in the following four months but reversing quickly leading to sideways movement with a negative bias. During this gyration, a bearish double top has formed. Without a quick trend reversal, another sharp downturn could emerge retesting or breaching the October lows. Both trendlines are also turning negative in line with the actual data trend.

The normalized trend (bottom chart) is almost diametrically opposite. Instead of a bearish double top, it shows an extremely bullish upsloping double bottom. In the process, it has eclipsed the prior high of $180/SF. While the trend has been linear, it's not a perfect one; the angle remains fatter than the customary 45 degrees, thus yielding a lower r-squared of 0.79. In a good linear world, the bottom of the linear trendline would have started at $165/SF and buoyed the two triangular bottoms, i.e., data points #10 and #13, respectively. The fact that the 2-Mo MA remains equally upsloping adds further credence to the breakout. Great breakout!

This analysis proves why a superficial top-line trending – despite being the industry standard – is inadequate, particularly in taking informed business decisions. The Champ (Monthly Median) must be tested (and validated) by an alternate hypothesis (Challenger, e.g., the Normalized trend). In this case, the Challenger wins!

That is why, we at Homequant, validate all top-line analyses like Trend Analysis, Sales Forecasting, RAR, Sales Ratio Studies, etc. with statistically significant Champ-Challenger studies (with the help of our internally-developed AVM values).

- Sid Som, MBA, MIM
President, Homequant, Inc.

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