{"id":4315,"date":"2009-02-16T12:00:17","date_gmt":"2009-02-16T20:00:17","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=4315"},"modified":"2009-07-30T20:03:44","modified_gmt":"2009-07-31T03:03:44","slug":"bottom-calling-inventory-based-forecast","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-inventory-based-forecast\/","title":{"rendered":"Bottom-Calling: Inventory-Based Forecast"},"content":{"rendered":"<p>Long-time readers may recall Deejayoh&#8217;s inaugural Seattle Bubble article from June 2007: <a href=\"http:\/\/seattlebubble.com\/blog\/2007\/06\/17\/why-inventory-matters\/\" title=\"Why Inventory Matters\">Why Inventory Matters<\/a>.  In it, he postulated that the Seattle-area Case-Shiller Home Price Index could be relatively accurately predicted fourteen months in advance by looking at year-over-year house inventory on the MLS.<\/p>\n<p>Let&#8217;s extend Deejayoh&#8217;s analysis fourteen months into the future to see if it will predict a bottom.<\/p>\n<p>Here are our basic assumptions for the Inventory-Based forecast (see <a href=\"http:\/\/seattlebubble.com\/blog\/2007\/06\/17\/why-inventory-matters\/\" title=\"Why Inventory Matters\">Why Inventory Matters<\/a> for more detail).<\/p>\n<ul>\n<li>Inventory changes forecast home price changes by 14 months.<\/li>\n<li>Equation: HomePrices<sub>YOY<\/sub> = (-0.386 * Inventory<sub>YOY<\/sub>) + 0.092<\/li>\n<li>I&#8217;ll be using King County SFH inventory only, as that provides the best fit through 2007 and 2008.<\/li>\n<\/ul>\n<p>Given these assumptions, here&#8217;s a rough picture of what Seattle&#8217;s Case-Shiller Home Price Index would look like through late 2009:<\/p>\n<p style=\"width: 600px; margin: 5px auto; font-size: 0.8em; text-align: center;\"><a href=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2009\/02\/bottom-calling-method-1_inventory-based.png\" title=\"Bottom-Calling Method 1: Inventory-Based Forecast\" rel=\"lightbox[4315]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2009\/02\/bottom-calling-method-1_inventory-based-600x435.png\" style=\"border: 0; margin: 5px;\" title=\"Bottom-Calling Method 1: Inventory-Based Forecast - Click to enlarge\" alt=\"Bottom-Calling Method 1: Inventory-Based Forecast\" width=\"600\" height=\"435\"><\/a><\/p>\n<p>Using the Inventory-Based forecast model, Seattle-area home prices (as measured by the Case-Shiller HPI) will hit a bottom early this year, and proceed with a sharp &#8220;V-shaped recovery,&#8221; ending the year well above their current levels.<\/p>\n<p>As <a href=\"http:\/\/seattlebubble.com\/blog\/2007\/06\/17\/why-inventory-matters\/\" title=\"Why Inventory Matters\">Deejayoh demonstrated in 2007<\/a>, the Inventory-Based forecast model has a pretty good record from 2001 through 2007.  However, the forecast for the coming year does not pass the &#8220;sniff test.&#8221;  No other signs currently point to such a sharp recovery this year, despite what this model is predicting.<\/p>\n<p>Unfortunately, it would appear that the Inventory-Based forecast model has reached the end of its useful life.<\/p>\n<p><span style=\"font-weight: bold; font-size: 1.2em;\">Method 1: Inventory-Based Forecast (Summary)<\/span><br \/>\n<b>Bottom Month:<\/b> April 2009<br \/>\n<b>Bottom Value:<\/b> 20.1% off peak<br \/>\n<b>Likelihood*:<\/b> 10%<\/p>\n<p><span style=\"font-size: 85%;\">* Likelihood is a totally subjective value assigned according to The Tim&#8217;s gut feeling.  Treat it accordingly.<\/span><\/p>\n<p><span style=\"font-weight: bold; font-size: 1.2em;\">Bottom-Calling Week on Seattle Bubble<\/span><\/p>\n<ul>\n<li>Introduction: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-week-on-seattle-bubble\/\" title=\"Bottom-Calling Week on Seattle Bubble\">Bottom-Calling Week on Seattle Bubble<\/a><\/li>\n<li>Method 0: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-week-on-seattle-bubble\/#method0\" title=\"Blind Optimism\">Blind Optimism<\/a><\/li>\n<li><strong>Method 1: Inventory-Based Forecast<\/strong><\/li>\n<li>Method 2: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/17\/bottom-calling-dollars-per-square-foot-linear-forecast\/\" title=\"Dollars per Square Foot Linear Forecast\">Dollars per Square Foot Linear Forecast<\/a><\/li>\n<li>Method 3: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/18\/bottom-calling-simple-mirror-forecast\/\" title=\"Simple Mirror Forecast\">Simple Mirror Forecast<\/a><\/li>\n<li>Method 4: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/19\/bottom-calling-affordability-index-forecast\/\" title=\"Affordability Index Forecast\">Affordability Index Forecast<\/a><\/li>\n<li>Method 5: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/20\/bottom-calling-san-diego-lag-forecast\/\" title=\"San Diego Lag Forecast\">San Diego Lag Forecast<\/a><\/li>\n<li>Conclusion: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/20\/bottom-calling-so-wheres-the-bottom\/\" title=\"So Where's the Bottom?\">So Where&#8217;s the Bottom?<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Long-time readers may recall Deejayoh&#8217;s inaugural Seattle Bubble article from June 2007: Why Inventory Matters. In it, he postulated that the Seattle-area Case-Shiller Home Price Index could be relatively accurately predicted fourteen months in advance by looking at year-over-year house inventory on the MLS. Let&#8217;s extend Deejayoh&#8217;s analysis fourteen months into the future to see&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[206,8],"tags":[292,129,14],"coauthors":[],"class_list":["post-4315","post","type-post","status-publish","format-standard","hentry","category-features","category-stats","tag-bottom-calling","tag-inventory","tag-predictions"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bottom-Calling: Inventory-Based Forecast \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-inventory-based-forecast\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Bottom-Calling: Inventory-Based Forecast \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Long-time readers may recall Deejayoh&#8217;s inaugural Seattle Bubble article from June 2007: Why Inventory Matters. 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