Auction.com is partnering with Google (GOOG) to release a new report that provides accurate market intelligence in real time. The companies are calling the report a first for the real estate industry, because it combines industry data, proprietary company transactional data and publicly available Google Trends data to predict market trends as they are occurring, instead of waiting weeks to see the findings of other benchmark studies.
According to Auction.com, the “Nowcast” is based on data modeling developed by Google Chief Economist Hal Varian, who designed the report to use “contemporaneous forecasting,” which he defines as the ability to predict what is happening as it is happening.
The Nowcast applies Varian’s theories regarding the use of publicly available and anonymous Google Trends data to the specific question of predicting real-estate market activity.
Auction.com said that while most of the frequently referenced real estate market reports are dependent on the completion of closings and delayed by the recording process, the Nowcast delivers highly accurate market data in real time.
“Google Trends data – which is anonymized, publicly available search information – offers valuable insights into current economic and consumer trends,” Varian said. “By layering industry-specific transactional data and subject matter expertise over that search data, organizations such as Auction.com are able to create powerful predictive models for accurately forecasting buying behavior in the present and for the coming months.”
The partnership with Google is not new for Auction.com, which received a $50 million investment from Google Capital in March, and said that the Nowcast is a direct result of that investment.
“We’re thrilled to be able to launch the Auction.com Real Estate Nowcast – a very tangible result of our strategic relationship with Google Capital,” said Jeff Frieden, CEO and co-Founder of Auction.com.
“Their guidance, along with the advice of Google employees such as Dr. Varian, has helped us really make the most of Google Trends data as we seek to provide a better snapshot of the real estate market for consumers, investors and real estate professionals.”
In Auction.com’s first Nowcast, released Thursday, predicts that existing home sales in October will fall between seasonally adjusted averages of 4.967 and 5.380 million annual sales, with a targeted prediction of 5.178 million.
According to Auction.com’s testing of its forecasting model, the actual total of existing home sales from The National Association of Realtors fell with Nowcast’s predicted range of existing home sales totals in each month from April through September.
Auction.com said that it plans to release the Nowcast near the middle of each month, “once analysis can be completed on early economic, industry and proprietary transactional data combined with related online search term activity that indicates home-buying intent.”
The company also said it is currently working towards increasing the accuracy of the Nowcast even further, by running multiple models and layering in additional information variables, with the intention of expanding upon this ability in the future to similarly predict new home sales as well as home pricing trends.
“Auction.com’s ability to deliver timely analysis of current market conditions can provide critical insight and enhanced predictability to industry professionals, economists and government entities alike,” said Rick Sharga, executive vice president for Auction.com.
“Since real estate trends play such a vital role in our overall economy, there’s a compelling need for accurate, more timely housing market forecasts, rather than data that comes out two to four weeks later.”