ECONOMIC OUTLOOK Over twenty years of proven expertise and trend analysis in evaluating residential property values. |
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EQUILIBRIUM HOME PRICEThe key to Local Market Monitor's ability to accurately forecast home prices is our proprietary concept of Equilibrium Home Prices. The Equilibrium Home Prices are based on the observation that in the long run, local home prices are closely linked to local income. The extent to which actual prices are higher than the Equilibrium Home Price is a measure of how much adjustment will eventually take place and a measure of the risk that actual home prices will fall. This tool serves as an early warning system for potential mortgage risks. By comparing the actual home prices in a market to the Equilibrium Home Price, Local Market Monitor classifies local markets into one of three categories:
In all unbalanced markets examined by Local Market Monitor over the previous several decades, actual home prices always eventually return to the Equilibrium Home Price, although the adjustment process usually requires several years. |
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