Methodology for Housing Market Ranking
The specific primary data employed is the Zillow Home Value Index (ZHVI). This measure is a smoothed and seasonally adjusted housing index that is reported monthly with a three-week lag. The ZHVI does not include the tails of reported transactions. Instead, it only reports closings in the 35th to 65th percentile range, which allows for a more accurate estimate of any local housing price trend. The ZHVI has been reported monthly since January of 1996, which is a sufficiently long enough time span for trend development.
Once the data is secured, we estimate via a logarithmic fit a housing price trend. This trend is employed to estimate a current ZHVI (housing price estimate), which is compared to the current actual ZHVI. From there, a Premium/Discount for a given market is calculated.