On Thursday, leading analytics company CoreLogic [1] compared their CoreLogic HPI Forecast released in June 2016 to the actual HPI Index that came out in August in its first “HPI Forecast Validation Report”. The company announced that moving forward, the report would be biannual. So, how accurate were they in terms of predicting how home prices would grow over a 12-month period?
In core based statistical areas (CBSAs) like Phoenix-Mesa-Scottsdale, AZ, very. In this market CoreLogic forecasted that the area would experience a 6.2 percent increase in home prices in 12 months, while the area actually jumped 6.6 percent.
Other accurately predicted CBSAs included Indianapolis-Carmel-Anderson, IN and Washington-Arlington-Alexandria, DC-VA-MD-WV (both with only a 0.5 percent difference) and Tampa-St. Petersburg-Clearwater, Florida and St. Louis, MO-IL (both with only a 0.6 percent difference).
Nationally, CoreLogic accurately predicted the path home prices would take as well. In June 2016, the company predicted a national price increase of 5.4 percent, and reported an actual price increase of 6.1 percent as of June 2017 (a 0.7 percent difference).
“Our clients leverage the CoreLogic HPI Forecasts to price portfolios, conduct stress testing, allocate cash reserves and conduct a host of other critical business functions,” said Dr. Frank Nothaft, Chief economist for CoreLogic. “With the introduction of the biannual HPI Forecast Validation Report, users can now get specific insight into the degree of accuracy of our HPI forecasts at the national and CBSA levels.”
The area that reported the largest gap between forecast and reality was the CBSA of Seattle-Bellevue-Everett, WA with overestimated prices by 8.4 percent. In this locale, CoreLogic predicted a 14.3 percent increase in prices and only had a 5.9 percent increase.
To see additional CBSA data, click here [2].