Altos Research 10,000 US zip codes

The company uses a technology platform that gathers real estate data, analyzes it in real time and creates analytical reports for local markets. The result is a snapshot of current prices and demand, which may provide insight into where the market is heading.

As the company explains on its website, "The Altos team has made a career of building systems that analyze huge amounts of complex data, find compelling patterns and communicate those findings to a broad audience. With Altos Research, we're applying those skills to the crazy world of real estate market information."

Software developers Michael Simonsen, president and CEO, and Jason Buberel, vice president of engineering, co-founded the firm in 2005 after several years of research. As Simonsen explains now, "We started working on the algorithms that power our analysis in 2002. With each of us sitting on fat Silicon Valley mortgages and the tech market nuclear winter brewing all around us, we simply wanted to know what was happening to property values. But any research we could find at the time was based on old data and tended to be only regionally visible. Years later, we can look back and see that property values in Los Altos sank by 20% during 2001 and that they didn't reach their past peak until 2005. But in the middle of '02, who knew?"

GlobeSt.com caught up with Simonsen to learn more about the company and the ways investors and institutions are making use of its data.

GlobeSt.com: Zillow, eppraisals.com and HomeGain all provide property valuation information. My-currency.com provides community-driven price predictions for homes. You describe all of that as great information...but not enough. Why is this insufficient?

Simonsen: A lot of systems will provide you with an estimate of a home's price using previously sold properties as sales comparables. While this number is important to know, it lacks in a few critical areas. A home valuation doesn't answer for example, "are we seeing the bottom?" or "how do inventory levels compare to last year at this time?" Making investment decisions requires much more than insight than just a property valuation.

GlobeSt.com: So how does Altos differ from its competitors?

Simonsen: Altos Research answers the question "How's the market right now?" We like to point out that there are three questions in real estate: What's for sale? How much is this property worth? and How's the market? People commonly have answers for the first two. Every newspaper in the country has an opinion on market conditions. We have the data.

GlobeSt.com: In addition to home prices, what other kinds of real estate data does Altos provide?

Simonsen: We track literally hundreds of statistics. Beyond pricing and valuation trends, we track supply and demand statistics like inventory levels--number of properties listed for sale--days on market, etc. We also calculate powerful data like percent-of-properties-on-the-market-with-price-reductions and the magnitude of those price reductions. We organize all our stats in price range quartiles and by property type so you can see real-time market conditions in the properties that impact you most. Often the high-end of the market differs vastly from conditions at the low end.

GlobeSt.com: You've developed a proprietary Market Action Index that's designed to give users a quick snapshot of the health of the market. Can you tell me more about this tool?

Simonsen: The higher the Index goes, the hotter the market. Like a thermometer, the measurable scale goes from zero to over 100. We set a threshold at an index value at 30. Above 30, it's a seller's market; below 30, it's a buyer's market. Sometimes demand climbs really high and properties stay on the market for only a matter of days. In those instances, you may see an index value of more than 100.

GlobeSt.com: Is any market doing well right now or are some just doing worse than others?

Simonsen: There are essentially no markets in the US that could be described as "doing well" right now. It's next to impossible to find areas where our Market Action Index registers "Seller's Market." You can find small local markets where prices held up this year, because they're the highly desirable neighborhoods whose buyers were well financed. But even in those markets, the time to sell is much higher than anything we've seen in years. And with the latest economic turmoil, prices in even these best areas are likely to be hit.

GlobeSt.com: Where do you see the real estate market heading, generally speaking? Are there any positive signs for investors?

Simonsen: For cash-heavy investors, there will continue to be distressed-sale opportunities; the pain is not yet over for the mass market. However I would caution investors to expect significantly greater downside pricing pressure. Many properties that currently look discounted have much further to decline.

Instant Insights /

Altos Research Tries to Predict the Property Market

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