The housing market index (HMI) evaluates the housing market of individual residential blocks and compares them to the average of all residential blocks in a user-defined geography, such as a neighborhood. In addition to serving as an analytical tool for monitoring conditions of an area’s housing market, the HMI may also serve as a guide for developing policy recommendations and investment strategies for long-term housing stabilization. Unlike many other housing market analyses, the HMI provides a “zoomed-in,” block-level picture of the housing market by using locally produced parcel-level data.

Variables and Methodology

The HMI examines the housing market through a combination of four housing market indicators:

• Value Retention — which calculates the change in estimated market value of the homes on a given block from its pre-recession high point to its current value (source: Hennepin County and Ramsey County Parcel dataset Q1 2016)
• Owner occupancy — which looks at the percentage of homes on a block that are currently occupied by owners (source: Hennepin County and Ramsey County Parcel dataset)
• Physical condition — which assess the current structural integrity/quality of the homes on a given block (Minneapolis Assessors Office; Ramsey County Assessors Office)
• Vacancy — which determines the percentage of homes on a given block that are vacant as of March 2016 (Minneapolis Vacant and Boarded Registry; St. Paul Vacant and Boarded Registry)

The four component variables of the HMI are measured on different scales. To combine them into an overall index, each variable’s block-level averages go through a z-score transformation. In this process, each block-level variable is given a new score based on the mean and standard deviation of the same variable for the user-defined geography. This puts all four variables on a common scale that reflects, for each variable, the level of disparity between each block and the larger geography’s average—specifically, the number of standard deviations that each block is above or below the area average. (A value equal to the average is 0.)

By default, the HMI assigns equal weight to each of the variables. But users of this site may adjust the weights to emphasize or deemphasize the variables as they wish.