Can a real estate chart help forecast the future of the Tallahassee housing market? Is it really possible to anticipate the future by observing how short term trends are interacting with long term trends? I ponder these questions after receiving an email from long-time reader "Bob" who likes to use charts to track trends in the stock market.
Bob wrote:
Has your 1-year moving average of housing sales (units sold) crossed above the longer term moving averages yet?
Before we jump into what is nearly as guest-authored-post, let's look at "what the heck he's talking about."
Bob likes to utilize technical analysis when examines the stock market. In a nutshell, this means that rather than focus on the fundamentals of a company or a sector, he looks more at the trading cycles and the current and past trends of a specific security in order to anticipate its next logical move. You can read a little more about technical analysis at Wikipedia.
Today we will look at a technical analysis of the Tallahassee real estate market, and I promise your head will not explode if you continue reading. It might be a bit more "mathy" than we normally write, but I think it is a very interesting analysis of the market.
Technical Analysis Of The Tallahassee Housing Market
The following graph shows the kind of information that Bob likes to observe. It shows the number of closed home sales each month in Tallahassee, and then plots the one-year, five-year, and ten-year moving average of home sales in order to identify trends. His prognosis for change is quite shocking ... [continued here]
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