Here is a quick update on the work mohican and I did in the spring around refining mohican's work tracking price changes and months of inventory. Remember that the best fit was to track half-over-half (i.e. 6 months over 6 months) price changes to a three month moving average of months of inventory (total active listings at the end of the month divided by the sales in that month).
Here is mohican's famous scatter plot for half-over-half versus 3 month moving average MOI:
Remarkably the correlation is disturbingly accurate into the downturn. Looking forward we can see how well the model has "predicted" the next month's price movements.
By happenstance we can see the model was consistently predicting larger price drops than actually occurred, except last month when it was bang on. In any case, the model predicts the November benchmark to be 14.1% below that of May of this year, or about $611,000. Likely a bit aggressive, but there it is. I am expecting the November benchmark to come in around $650,000 with what looks like a long way to go in the southern direction.
Thanks Jesse for the update.
I wanted to weigh in here on this model because at the time when we put it together we didn't know how well it would help us predict price drops. It apparently worked exceptionally well and put us ahead of the curve when looking at the size of the potential price drops. I see no reason to expect a change now. More price drops to come.