Definitions and Terminology

Inflation Adjusted Annual Home Price Appreciation %

This is the key metric we use for most TA because it strips out inflation. We do this to measure the true Supply & Demand forces. One way to think about this is if you were on a diet and weighed yourself every day - but sometimes you were wearing full winter coat and boots, sometimes in your underwear, and other times wearing who knows what.

Inflation

It is like all that clothing - it masks what is really going on with your weight. Inflation is like that for housing... it masks what's really happening.

Annual Home Price Appreciation

This is Inflation Adjusted Annual Home Price Appreciation % plus inflation. It's what is normally quoted in the media.

Quarterly Home Price Appreciation (annualized %)

- This is the change in home prices from 3 months earlier and then annualized (i.e. - multiplied four) to get an annual equivalent appreciation rate.

- Quarterly comparisons have more 'noise' in them, and will tend to bounce around a lot more than annual comparisons. However, quarterly data can also spot market reversals and changes quicker because it only looks back 3 months, instead of a year.

Inflation Adjusted Home Price Index

- An 'index" is an easy way to compare different markets over time (i.e. - cumulatively, rather than annually or quarterly) RELATIVE to each other. An index takes a year (any year) and assigns a value to home prices for that year (say '100'). That's called the 'base year.' Then - for any other year, home prices can be expressed in terms relative to that 'base year' index value. So, when comparing say Detroit and San Francisco (which have very different home prices), the index simply compares the relative change each market has experienced.

- Index values are also helpful in showing CUMULATIVE changes in home values and include the 'compound effect' over many years.

Inflation Adjusted Quarterly Home Price Appreciation (%)

- This is same as Quarterly Home Price Appreciation (annualized %) except that it excludes the effects of general inflation.

Raw Home Price Index

- This is same as Inflation Adjusted Annual Home Price Appreciation % except that it includes the effects of general inflation (purchasing power).

CAGR (Compound Annual Growth Rate)

CAGR is a useful measure to discover if there are any zip codes that consistently looked RELATIVELY better than other nearby zip codes over the past few years

The 2/3-year CAGR should 'smooth out" some of the wild swings in data – giving you a better indication of the true RELATIVE performance of the micro market (and whether or not it's an area worthy of your investment). This link explains it in further detail: https://knowledgebase.housingalerts.com/article/260-micro-market-maps-users-guide

Master Score

This is the best single indicator (if you only want to look at ONE scoring element). The "Master Score" is a proprietary algorithm that integrates all data into a single score.

Momentum

Local real estate markets tend to maintain a steady trend in one direction. The trend can be up, down or flat. We call this 'market momentum.' Momentum is important, but a high momentum score does not, by itself, indicate a hot market. Momentum scores are 'long range' indicators that should be used with TAPS and Master Scores.

T.A.P.S. Combined Score Rank

This is the Technical Analysis Point Score ranking after combining the Local (city-level) market with the State, Regional and National TAPS scores.

T.A.P.S. Local Score Rank

This is the Technical Analysis Point Score ranking for ONLY that particular city. It ignores any impact State, Regional or National market TAPS scores may have on that local market. T.A.P.S. indicates the strength of the market.

1-yr THAR

This gauge ranks all markets based on its 'raw' Total Home Appreciation Rate over the previous year. 'THAR' scores are 'spot' indicators that should be used with TAPS and Master Scores, not as stand-alone decision triggers.

4-yr THAR

This gauge ranks all markets based on its 'raw' Total Home Appreciation Rate over the previous four years. 'THAR' scores are 'spot' indicators that should be used with TAPS and Master Scores, not as stand-alone decision triggers.

Micro Markets are scored and ranked using proprietary algorithms for the likelihood of appreciation RELATIVE to ALL MARKETS NATIONWIDE.

The 'Hot Market Score' is expressed as a Percentile from '0' (weakest) to '99' (strongest). For example, a score of '93' means THAT micro market scored higher (stronger) than 93% of all similar U.S. micro markets.

ONLY THOSE MARKETS IN YOUR CURRENT SUBSCRIPTION ARE DISPLAYED but the score is based on all markets nationwide. This allows you to see how your market(s) compare relative to ALL markets in the U.S.

House Value Finder (PRO level)

On a nationwide basis, lower priced properties tend to be in weak or flat markets with less likelihood for appreciation. Non-appreciating markets with poor demand (or excess supply) are riskier because most real estate wealth comes from Leveraged Appreciation.

Without "Appreciation" your TOTAL ROI declines dramatically.

HOWEVER, since every property is unique and every market is dynamic (changing), with the right tools you can identify those local markets with BOTH lower priced properties AND a higher likelihood for appreciation.

This tool ranks all markets nationwide RELATIVE TO ALL OTHER MARKETS based on its median home value and its relative 'hot market score.' The last column combines both indicators to create a ranked list of low-priced properties in potentially stronger markets.

NOTE: Micro markets have far fewer real estate transactions than their parent 'Metro level' market. Because of the fewer data points, micro market analysis is subject to more volatility and less reliability.

Micro markets tend to closely follow the appreciation cycles of their 'parent' Metro market. These micro rankings should be used as a general guide, NOT as 'stand-alone' indicators. What's happening at the Metro level will significantly affect the micro market's long-term performance.

Median Home Value

This is the estimated median house value of all Single Family Residential (SFR) properties in the micro market.

Home Value Percentile

The median property value compared to ALL similar properties in the US, expressed as a percentile.

For ex, a percentile score of '93' means THAT micro market's median home value is LOWER than 93% of all other counties nationwide.

Hot Market + House Value Score

This indicator combines each micro market's relative house value with its relative 'hot market score' to help identify potential counties, zip codes and neighborhoods with both lower priced properties AND a relatively higher potential for appreciation.

NOTE: This COMBINED score is subjective in that it gives equal weight to House Values and Hot Market Score. Use it as a 'short cut' to filter through thousands of micro markets when searching for low property values AND some likelihood of above average appreciation.

Cash Flow Finder (PRO level)

In general, higher cash flowing properties are typically located in weak or flat markets. The higher cash flow reflect the increased market risk from lower anticipated property appreciation.

HOWEVER, since every property is unique and every market is dynamic (changing), opportunities exist to find a higher cash flowing properties in emerging or hot local markets. This tool overlays each market's median home price, gross rent yield AND local 'hot market score' to help locate those markets more likely to produce higher TOTAL returns.

NOTE: Micro markets have far fewer real estate transactions than their parent 'Metro level' market. Because of the fewer data points, micro market analysis is subject to more volatility and less reliability.

Micro markets tend to closely follow the appreciation cycles of their 'parent' Metro market. These micro rankings should be used as a general guide, NOT as 'stand-alone' indicators. What's happening at the Metro level will significantly affect the micro market's long-term performance.

Median Rent

Rental rates for single family homes can vary significantly based on location, size, age, amenities and condition of the property. The median rental rates shown here are estimated across the entire micro market. Since the same methodology was used for all similar markets nationwide, we're able to focus on the RELATIVE scores/rankings between different micro markets.

Gross Rent Ratio

This is the ANNUAL gross median rent (monthly x 12) divided by the median property value. A higher ratio is likely to generate more cash flow then a lower ratio.

Note: Many factors other than gross median rent affect cash flow, including vacancy, repairs, operating expenses and management. The actual ratios can and likely will vary significantly from those shown here. Since the same methodology was used for all similar markets nationwide, we're able to focus on the RELATIVE scores/rankings between different micro markets.

These calculations are for educational and comparison purposes only and do not replace your own Due Diligence!

Hot Market + Cash Flow Score

This indicator attempts to identify micro markets with both relatively higher cash flow potential AND a relatively higher potential for appreciation.

The combined score is expressed as a Percentile from '0' (weakest) to '99' (strongest). For example, a score of '93' means THAT micro market scored higher (stronger) than 93% of all similar U.S. micro markets.

ONLY THOSE MARKETS IN YOUR CURRENT SUBSCRIPTION ARE DISPLAYED but the score is based on all markets nationwide. This allows you to see how your market(s) compare relative to ALL markets in the U.S.

NOTE: This COMBINED score is subjective in that it gives equal weight to Gross Rent Ratio and Hot Market Score. Use it as a 'short cut' to filter through thousands of micro markets with likely above average cash flow AND appreciation.

Rent Growth Tracker (PRO level)

This tool lists the annual percentage increase or decrease for the median rent charged for the median single family home over different time periods.

You can re-rank the list by clicking on any of the blue column titles and/or list and rank micro markets in the same county, state or nationwide by narrowing your search using the drop-down menus.

In general, you'd like to see a market with strong rental growth rates (higher % increase) COMBINED with a strong Hot Market Score!

NOTE: Micro markets have far fewer real estate transactions than their parent 'Metro level' market. Because of the fewer data points, micro market analysis is subject to more volatility and less reliability.

We recommend using the 3 or 5-year CAGR (Compound Annual Growth Rate) columns for a more accurate/reliable rental growth rate history.

These micro rankings should be used as a general guide, NOT as 'stand-alone' indicators. It's important to monitor the market's strength or weakness at the larger, Metro level because micro markets tend to follow what happens at the Metropolitan level over the long-term.

Annual Rent Growth (3-Yr CAGR)

This is the ANNUAL percent change in median rent for the median house over the last 3 years. (CAGR (Compound Annual Growth Rate) is a more accurate measure of annual % change over a multi-year time period.)

Annual Rent Growth (5-Yr CAGR)

This is the ANNUAL percent change in median rent for the median house over the last 5 years. (CAGR (Compound Annual Growth Rate) is a more accurate measure of annual % change over a multi-year time period.)

Rent Growth (last year)

This is the percentage change in the median rent for the median house last year, as compared to the previous year.

Rent Growth (2-yrs ago)

This is the percentage change in the median rent for the median house 2 years ago, as compared to the previous year.

Rent Growth (3-yrs ago)

This is the percentage change in the median rent for the median house 3 years ago, as compared to the previous year.

D.R.E.A.M. - Dynamic Real Estate Appreciation Map

Shows the appreciation for States and Cities that you are subscribed to.

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