From a small northwestern observatory…

Finance and economics generally focused on real estate

Google’s real estate index

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Yeah, me neither….

I was doing a search for some real estate stats today, and happened upon the neatest little toy — it’s Google’s index of real estate searches, which you can access via: GOOGLEINDEX_US:RLEST. According to the gurus at Google, it tracks queries to “real estate, mortgages, rent, apartments, and so forth.” Also, according to them, you can use it to compare to real estate investment indices.

Having SOOOOOOO much spare time on my hands (my colleagues here at Greenfield are shuddering at that), I decided to give it a test. I downloaded the index’s raw data for the last 7 years (believe it or not, you can do that), and then downloaded the iShares Dow Jones Real Estate pricing data for the same dates. A little manipulation was in order, because Google gives data for 7 days a week, but of course the stock market is only open 5, and then not on holidays and such. The difference (about a 1000 days) I made up by simply taking the closing prices on Friday and spanning that over the weekend. You get the picture.

The graphic looks like this:

courtesy: Google Real Estate Index and iShares Dow Jones U.S. Real Estate

Not being one to settle on graphics, I then ran a correlation examination on the two indices. Guess what? Yeah, nothing. To be specific, I get a correlation coefficient of 29.6%, which is fairly close to meaningless. This dog don’t hunt, as they say.

Oh well, sometimes it’s fun to find out what DOESN’T work. In short, the volume of Google searches on real estate may have some interesting insights buried deep within it, but I don’t see it yet.

Written by johnkilpatrick

November 15, 2011 at 11:05 am

Posted in Finance, Real Estate

Tagged with ,

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