Method for forecasting housing prices using a dynamic error correction model

A computer-implemented method for processing data to forecast a price of a property in a first market utilizing historical transaction data related to a second market, said method comprising:

• calculating, using a data processor, an electronic price index as a function of time for properties in the second market based on the historical transaction data;
• extracting first transaction data for the first market from one or more databases;
• extracting second transaction data for the second market from one or more databases;
• calculating, using the data processor, an error correction for the first market using the first transaction data and the second transaction data;
• generating, using the data processor, data indicating a price of the property in the first market based on the calculated price index for properties in the second market and the calculated error correction for the first market;
• and
• storing the generated data in computer memory.

A system for forecasting a price of a property in a first sub-market utilizing historical transaction data related to a second sub-market comprising:

• one or more databases containing first transaction data from a first sub-market and second transaction data from a second sub-market;
• and
• a processor for processing the transaction data, wherein the processor:
• calculates a price index as a function of time for the second sub-market,
• extracts first transaction data for the first sub-market from the one or more databases,
• extracts second transaction data for the second sub-market from the one or more databases,
• derives an error correction function correlating data in the first and second sub-markets using the first transaction data and the second transaction data,
• derives a price index as a function of time for the first sub-market,
• generates data that indicates an estimate of real estate transaction prices for the property in the first sub-market based on the price index and the error correction function, and
• stores the generated data in computer memory.

A non-transitory computer-readable medium comprising instructions which, when executed by a data processor, process data to forecast a price of a property in a first housing sub-market utilizing historical transaction data related to a second housing sub-market, the processing of data including:

• calculating a price index as a function of time for properties in the second housing sub-market;
• extracting first transaction data for the first housing sub-market from one or more databases;
• extracting second transaction data for the second housing sub-market from one or more databases;
• calculating an error correction function for the first housing sub-market using the first transaction data and the second transaction data;
• calculating a price index as a function of time for properties in the first housing sub-market based on the calculated price index of the second housing sub-market and the calculated error correction function;
• generating data indicating an estimate of a price of the property in the first housing sub-market based on the calculated price index for the first housing sub-market, and
• storing the generated data in computer memory.

A computer-implemented method for processing data to forecast a price of property in a first sub-market with sparse transaction data utilizing historical transaction data related to a second sub-market with plentiful transaction data, the method comprising:

• calculating a price index as a function of time for properties in the second sub-market;
• extracting first transaction data for the first sub-market from one or more databases;
• extracting second transaction data for the second sub-market from one or more databases, the second transaction data including more data points than the first transaction data;
• calculating an error correction function for the first sub-market using the first transaction data and the second transaction data;
• calculating a price index as a function of time for properties in the first sub-market based on the calculated price index of the second sub-market and the calculated error correction function;
• generating data that provides an estimate of a price of the property in the first sub-market based on the calculated price index for the first sub-market;
• and
• storing the generated data in computer memory.