Mtn View: Market Action

A view of Mountain View’s festive main street, Castro.

Altos Research, a start-up based in Mountain View, has developed a useful metric for figuring out what’s happening in a local real estate market. Called the Market Action Index (MAI), it illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory.

An MAI value greater than 30 typically indicates a “Seller’s Market” (a.k.a. “Hot Market”) because demand is high enough to quickly gobble up available supply. A hot market will typically cause prices to rise. MAI values below 30 indicate a “Buyer’s Market” (a.k.a. “Cold Market”) where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A cold market will typically cause prices to fall.

The graph above shows that Mountain View’s 90-day-average MAI has been hovering around 45 since the beginning of the year. So it’s still a seller’s market, though the price-per-square foot has dropped from about $700 to $608 per sq. ft. during the spring, making Mountain View the most affordable town in the Menlo Park — Palo Alto region of the Peninsula.