Real estate markets are inherently local in nature. The value of a property is informed by the sale of similar nearby properties in the recent past. Thus, house price changes in one city may have no relevance to prices in another.
In a world awash with data, cheap data storage, ubiquitous computing and advanced analytics, providing housing insights at the neighbourhood level should no longer be an insurmountable challenge. In fact, researchers at the U.S. Federal Housing Finance Agency have demonstrated how house price indices can be generated at the postal code level.
The city-wide index is a useful metric to know about the trends in the broader regional housing market. It will identify times where the housing market was up or down, thus helping the buyers and sellers in their decision-making. The local price indices developed by Bogin and his co-authors generated insights that remained hidden from other aggregate indices. The authors found that house price appreciation in neighbourhoods near downtowns in large American cities was considerably higher than in places that were 10 miles away from the city centre.