2 cents:

1. Please create a permanent link to the index. so that it is not lost into oblivion.
   
2. Can you have a MediaWiki installed? gurgaonscoop.com\wiki something. It's 10 min job. :)

In attempting to identify bubbles before they burst, economists have developed a number of financial ratios and economic indicators that can be used to evaluate whether homes in a given area are fairly valued. By comparing current levels to previous levels that have proven unsustainable in the past (i.e. led to or at least accompanied crashes), one can make an educated guess as to whether a given real estate market is experiencing a bubble.

Indicators describe two interwoven aspects of housing bubble: a valuation component and a debt (or leverage) component. The valuation component measures how expensive houses are relative to what most people can afford, and the debt component measures how indebted households become in buying them for home or profit (and also how much exposure the banks accumulate by lending for them).

A basic summary of the progress of housing indicators for U.S. cities is provided by Business Week [5]

Housing affordability measures

    * The price to income ratio is the basic affordability measure for housing in a given area. It is generally the ratio of median house prices to median familial disposable incomes, expressed as a percentage or as years of income. It is sometimes compiled separately for first time buyers and termed attainability. This ratio, applied to individuals, is a basic component of mortgage lending decisions. According to a back-of-the-envelope calculation by Goldman Sachs economists, a comparison of median home prices to median household income suggests that U.S. housing in 2005 is overvalued by 10%. "However, this estimate is based on an average mortgage rate of about 6%, and we expect rates to rise," the firm's economics team wrote in a recent report. According to Goldman's figures, a one-percentage-point rise in mortgage rates would reduce the fair value of home prices by 8%.
    * The deposit to income ratio is the minimum required downpayment for a typical mortgage (definition of "typical" varies), expressed in months or years of income. It is especially important for first-time buyers without existing home equity; if the downpayment becomes too high then those buyers may find themselves "priced out" of the market. For example, as of 2004 this ratio was equal to one year of income in the UK (Nottingham Trent University paper).
      Another variant of this ratio measures the ratio of median family income to the income necessary to qualify for a typical mortgage or a typical home; this is what the National Association of Realtors calls the "housing affordability index" in its publications. [6]. (The NAR's methodology was criticized by some analysts as it does not account for inflation [7]. Other analysts, however, consider the measure appropriate, because both the income and housing cost data is expressed in terms that include inflation and, all things being equal, the index implicitly includes inflation[citation needed]). In either case, the usefulness of this ratio in identifying a bubble is debatable; while downpayments normally increase with house valuations, bank lending becomes increasingly lax during a bubble and mortgages are offered to borrowers who would not normally qualify for them (see Housing debt measures, below).
    * The Affordability Index measures the ratio of the actual monthly cost of the mortgage to take-home income. It is used more in the United Kingdom where nearly all mortgages are variable and pegged to bank lending rates. It offers a much more realistic measure of the ability of households to afford housing than the crude price to income ratio. However it is more difficult to calculate, and hence the price to income ratio is still more commonly used by pundits.
    * The Median Multiple measures the ratio of the median house price to the median annual household income. This measure has historically hovered around a value of 3.0 or less, but in recent years has risen dramatically, especially in markets with severe public policy constraints on land and development. The Demographia International Housing Affordability Survey uses the Median Multiple in its 6-nation report.

There are two schools of thought on housing stats:

    * Price indexes- These are generally based on repeat sales of the same property over time or an aggregate analysis of housing prices, with some adjusted for seasonal changes and/or inflation.
    * Housing prices - These results are based on an aggregate summary of the sales that transferred during the period and can be skewed by the mix.

You've got producers of indexes telling you that prices are less meaningful, yet users of the indexes often view them as a "black box" and don't grasp how the information was calculated (do we hear "seasonally adjusted?") Indexes tend to be created for macro markets because the data set needs to be large. Cycnicism has been a detriment to reliance on indexes.

Those that rely on housing prices tout that they are the real thing yet most resources for housing prices tend to be non-economist types, trade groups and real estate firms, because they tend to be easier to generate and report than an index. There are a growing number of market studies put out in the public domain by local real estate brokers and agents (and of course, appraisers) to try to bridge the gap between the national stats and local markets. However these reports are often limited by the size of the data, limited understanding of what the data really means and are clouded by their intentions.

There are generally four sources of housing stat interpretation:

    * Government - namely Commerce/Census/OFHEO
    * Economists - Chicago Mercantile Exchange (Shiller) and other "Starconomists" like Roubini, Zandi (Moody's) and others.
    * Real estate brokerage trade groups and firms - The National Association of Realtors (NAR) is the primary source of information on national housing and local brokerage firms. Regional MLS systems and brokerage firms are the other primary provider.
    * Online services like Zillow.com, RealtyTrac, ZipRealty release housing stats but generally don't provide historical trends to include for perspective.
    * Real estate appraisers, consultants and analysts I would fall into this category as well as other housing stats from other markets presented on Matrix. We tend to relay on actual housing prices and interpret them without the trade group or incentivized spin, but its not without its faults either. The data is generally influenced by mix of housing stock that sells so its important that this group bridges the gap between the results and actual conditions.

Local, National and Internet:

    * National housing stats are reported religiously by nearly all national media outlets yet don't have a link to local markets. What happens in a neighborhood may or may not comparable to national markets and if the results are consistent, its really coincidence. NAR has touted national housing stats as an argument for real estate as a good investment but it doesn't reflect local volatility.
    * Local housing markets tend to have smaller data sets and are more affected by the mix of what sells. They can have a powerful affect on local moods but are often written by marketing departments as public relations pieces for trade groups and firms with a vested interest in the results and how it affects the bottom line.
    * Internet is an important delivery mechanism for real estate stats, but are often less thought out than traditional sources because many producers of this information don't have direct real estate experience, but rather have online experience from other industries. This isn't necessarily a bad thing, because bad habits and bias may not be developed but often, inappropriate uses of month over month stats exagerate certain market conditions.

Pitfalls and/or spins betrays most sources:

    * New home sales - Government stat quality is suspect and not necessarily unbiased. You just have to take a look at the widely quoted housing stats like New Home Sales from the US Commerce Department [pdf]. You just have to read an excerpt from the October release to see what I mean: This is 3.2 percent (±11.2%)* below the revised September rate of 1,037,000, and is 25.4 percent (±10.0%) below the October 2005 estimate of 1,346,000.
    * Median sales price (National Association of Realtors) - There is an emphasis on the national numbers in their series of reports on new and existing home sales. They do break up the country into quadrants, but all real estate is local. They have such an opportunity to gain the public trust but usually provide hard spin to the results and are very inconsistent in the commentary from month to month.
    * Sales price index (OFHEO) - The median sales price includes refinance data and excludes sales with non-conforming loans (mortgages greater than $400,000).
    * Housing price index (Chicago Mercantile Exchange) - Robert Shiller's repeat sale index lags the market by about 4 months and is targeted towards investors, not consumers. Trading volume is growing but is still too small to really provide a sense of market direction.

Since all politics real estate is local, but reporting of larger data sets is easier but less relevant, its very difficult for the consumer of real estate market information to know what, in fact, the truth is.
At the end of the day, real estate truth is open to interpretation.

Is that info available anywhere [since most of the txns(at least pre-built) are happening in builder records] ? - maybe a rough survey in the market would do for now.

More as it comes to mind...