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WHERE REAL ESTATE IS MOVING™1

NOWCASTING OVERVIEW 10/22/14

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The Impact of Economic Variables

Some economic data has the power to move financial markets.

Increased unemployment claims

Manufacturing growth

Higher home prices

• Consumer price index • GDP growth • Personal savings rate • New home construction • Metro home prices • Etc.

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The Impact of Economic Variables

But, reporting delays mean that we can’t know what happened today until weeks or months into the future:

• The US Bureau of Labor Statistics will release September’s consumer price index (CPI) on 10/22. The final 2012 CPI statistics were released in 2014.

• The US Bureau of Economic Analysis will release it’s “advance estimate” of Q3 GDP growth on 10/30. September personal income statistics will be available on 10/31.

• September new home construction statistics were released by the U.S. Census Bureau on 10/17.

• NAR will release Q3 home prices data on 11/6.

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Predicting the present

Anyone who can clearly see what’s happening today will have a distinct edge.

Investors can use this knowledge to predict market movements.

Governments can use this knowledge to set monetary policy.

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Working with today’s economic data is like trying to drive by looking in the

rear view mirror.

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Maybe it’s time to start moving forward…

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Nowcasting

Nowcasting is an economics technique that uses real time information (and a bunch of complicated mathematical equations) to anticipate aggregated data results that will be released in the future.

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When social conversations move online…

As social conversation moved online, economists were able to predict flu epidemics, precipitation, and book sales just by looking at Twitter conversations and blog posts.

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When search moved online…

Google search trends have proven powerful at predicting purchases. Searches for automobiles can predict sales. Searches for tourist destinations can predict tourist visitation rates.

Toyota Camry Paris sightseeing

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Nowcasting the Real Estate Market

Given the long timelines involved in housing, nowcasting can significantly speed up access to today’s market data.

Home appraisers in Irvine

Google searches can “foresee” real estate purchases long before they’re recorded.

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When real estate transactions move online…

Imagine what we could predict by combining Google’s search trends with

Auction.com’s real time transactional data?

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Introducing the Auction.com Nowcast!

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The Nowcast Model

• Model uses data from 2004-present

• Our analysis included existing home sales from NAR, Google search term data and Auction.com data

• The working model improved the accuracy of the home sales forecast by 11%

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Auction.com Nowcast Accuracy

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Auction.com’s October Nowcast

September ‘14

Predicted

October ‘14

Actual

5,098,000

5,178,000

5,170,000

TBD on Nov 20

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Nowcasting Roadmap

• Continue refining US existing home sales model.

• Nowcast US existing home prices. We believe Auction.com data should be uniquely useful for this, since our platform captures pricing immediately upon close of auction, unlike traditional sales method, which introduces several-month lag between negotiation of price and closing of transaction.

• Expand Nowcast to regional existing home sales.

• Expand Nowcast to new home sales.