Center for Housing & Policy

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The tabs across the top of the tool show different views of the index and related information.

• Reading the Index: This view provides a brief demonstration of how to read and interpret the tool with examples from the Atlanta retail market.
• Market Rankings: This view identifies the 10 markets with the strongest upward momentum and the 10 markets with the strongest downward momentum for a selected property sector.
• U.S. Map: This view gives a snapshot of the indices of the entire United States for the most recent quarter.
• CRE Momentum Index: This view displays the Index for a user-selected market and property type. Below the market index are color blocks for the underlying variables driving the overall market index.
• Market Snapshot: This view displays the market indices of the four property sectors side by side, as well as an overall CRE index for the market.
• Variable Descriptions: This view provides the definitions of each variable used in the tool.

Reading the index

The market index is a weighted aggregation of the subsequent variables which were identified by subject matter experts as important drivers for the dynamics in the selected property sector. There are two key pieces to the index:

• Color: A color of a particular variable is determined by its relation to the long-term average of that variable. Orange hues indicate a value above the average ("upward") and blue hues indicate a value below the average ("downward"). Green hues reflect data that are in line with the long-term average. This shows the direction of momentum.
• Shade: The deepness of the color (darker versus lighter hues of a color) represents the variable's fluctuation, as measured by deviation in the variable over time. Deeper colors reflect higher deviation and, therefore, greater market volatility. This shows the strength of momentum.

Begin with the market index at the top of the tool and review the variables within the same column as the index block for the desired time period (for example, the quarter-to-date data is in the farthest-right column). Using the two pieces of the index, direction (color) and strength (shade), users can explore the variables that most significantly impacted the overall market momentum shift from one time period to another.

The first section of color blocks shows a quarterly time series of the past two years, up to the most recent quarter. The section of single-color blocks on the right side of the CRE Momentum Index view reflects the quarter-to-date index (as of the date shown at the top of the column). Given lags in data reporting, only those variables with data for the specified time period are shown. This gives an inside look at market trends since the end of the previous quarter, indicating the direction of a particular variable as it unfolds.

Understanding the index

In addition to the color palette, there is a hover feature in the tool. Hovering a cursor over any color block will show the market name, property type, variable (if applicable), index value (for the market only), and standard deviation.

The market index values at the top of the CRE Momentum Index view represent a weighted aggregation of the key variables identified beneath the values at the top. For the Market Snapshot view, the market CRE index is an evenly weighted sum (average) of the four property types.

The market index values on the CRE Momentum Index, Market Snapshot, U.S. Map, and Market Rankings views can range from 0 to ± over 100 (extreme case); the color legend ranges from -30 to +30. These values (-30 to + 30) represent an overall deviation in market fundamentals considered to be within "typical" market fluctuations; these fluctuations reflect changes that are considered "business as usual" (see the Technical Details for the statistical explanation).

The standard deviation shows how far the most recent data point is from the long-term average. Given the number of data points within the tool, the following distribution (a normal distribution) can be assumed for each variable. The standard deviation value as well as the color provide a clear distinction between the current data point and the market's long-term average.

Index values that are at or outside the ± 30 threshold will visually cue heightened deviation and, therefore, greater market volatility, as noted in the Reading the Index section above. The closer an index value is to 0, the closer it is to a particular variable's long-term average trend.

Data specifics

• Market definitions are matched to the OMB 18-03 list of all metropolitan areas, excluding Puerto Rico.
• There are 391 markets in the tool. Please note that some data may be missing for some markets, particularly the smaller markets, as data coverage is not always consistent. If a variable is missing, the value is set to 0 in the market index calculation.
• Population at the metropolitan-area level is reported annually. Exponential smoothing over the past 1.5 years was used to get an estimate up to the most recent quarter.
• Statistically, the values of the color legend (± 30 are the endpoints) represent an overall deviation in market fundamentals of 1.5 standard deviations from the mean (either above or below). A value of 1.5 standard deviations is generally considered a position of a high probability of either significantly below or above average performance. This is comparable to either the 7th or 93rd percentile rank.

Data sources

This tool relies on the following data inputs*

*See the Variable Descriptions tab in the tool for definitions for the tool variables.
**Economic data extracted from Moody's Analytics Data Buffet platform

How are the variables weighted within each property sector?

The Atlanta Fed's commercial real estate subject matter experts used experience and analysis to determine appropriate weighting for each variable in the broader market index. These weights are considered proprietary information to the Atlanta Fed and therefore are not shared explicitly in the tool.

What are the numeric values of the data? Why can't I see them?

Due to contractual obligations with our data providers, we are not able to share the underlying data. Any public data, which can be found under the heading "Data sources" in the Technical Details section above, can be explored through the providers' websites.

Brian Bailey, CRE, CCIM
Subject Matter Expert—Commercial Real Estate