Can Algorithms Be Trusted? Breaking Down the Housing Price Index and the CoreLogic AVM
Algorithms are everywhere these days, from recommending your next binge-worthy show to helping set the price of your home. But when it comes to something as personal and financially significant as real estate, can we really trust the numbers churned out by computers? Let’s break down two of the most common tools in the housing world—the Housing Price Index (HPI) and the CoreLogic Automated Valuation Model (AVM)—and see how they stack up against the insight of a local real estate agent.
What is the Housing Price Index (HPI)?
Think of the HPI as a giant thermometer for the housing market. It measures the movement of single-family home prices across the country, using data from repeat sales and mortgage transactions. The HPI gives a broad snapshot—showing whether home values are rising or falling in a particular area over time.
- Strengths: Great for spotting market trends and understanding the big picture.
- Weaknesses: It doesn’t account for the unique features of your home—like that beautiful backyard garden or newly renovated kitchen.
What is the CoreLogic AVM?
The CoreLogic AVM is like a real estate robot with a calculator. It uses algorithms to estimate a property’s value, pulling from recent sales, tax records, and property features. In seconds, it can spit out a number that’s supposed to represent your home’s market value.
- Strengths: Fast, data-driven, and can process thousands of homes at once.
- Weaknesses: Relies on the quality and timeliness of available data. If the info is outdated or incomplete, the estimate can be off—sometimes by quite a bit.
Comparing the Two
Both the HPI and CoreLogic AVM offer valuable insights, but they’re best at different things. The HPI helps you understand market trends, while the AVM aims to pinpoint a property’s current value. However, both are limited by the data they use and can’t “see” the character, charm, or quirks of your home.
Why Your Local Agent Still Matters
Here’s where your local real estate agent comes in. Unlike an algorithm, a seasoned agent knows the neighborhood, the stories behind the sales, and the little details that make your home special. Agents can walk through your home, talk to buyers, and understand the human side of real estate that no computer can replicate.
Algorithms are powerful tools, but they’re just that—tools. For the most accurate, personalized advice, it’s wise to trust your local expert. After all, when it comes to your biggest investment, a little human touch goes a long way.
Engel & Völkers local real estate experts are engaged in over 1,000 locations worldwide. Contact me to connect you with an advisor precisely where you want to be.
Chad Behnken
Luxury Real Estate Advisor
Licensed in CO and GA
Engel & Völkers Pikes Peak
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