Drawdown from Peak
How far the typical home value in an area sits below its highest point of the last five years.
The distance between an area's current typical home value and the highest value it reached in the previous five years, as a percentage of that peak.
An area sitting at its own five-year high reads 0%. An area whose typical home is worth 10% less than it was at the top of the period reads −10%. The measure never reads above zero, because the peak includes the present month.
Where a level says what homes cost and a trend says which way they are moving, this says where the market stands relative to its own recent best — a market at its high and a market recovering from a fall can show the same price and the same one-year gain.
Metrics in this family#
Drawdown from peak
levelCurrent value against the highest monthly value in the trailing five-year window, as a percentage of that high.
Considerations#
It is not a forecast. A deep drawdown is a description of what has already happened. It is read by some as a discount and by others as a warning, and the measure itself takes no position — which is why its rewarded direction is yours to set.
The window is fixed at five years and the peak moves with it. An area whose high point passes out of the trailing window will show its drawdown shrink with no change in price at all. Comparisons between areas whose peaks fall at different times inside the window are comparisons against different moments.
Most markets read near zero most of the time. In a long rising period the majority of areas sit at or close to their own high, so the measure separates places mainly at the lower end — it distinguishes the fallen from everyone else more than it ranks the risen.
It inherits everything the underlying index carries. The value is smoothed and seasonally adjusted, so a brief real dip may not appear and a peak may be dated later than it occurred. It is nominal, so an area whose prices merely failed to keep up with inflation shows no drawdown. And it is a model output, not a record of transactions — see Zillow Home Value Index.
Tract figures are assembled, not published. A tract's drawdown is blended from the ZIP codes overlapping it, weighted by shared housing units, so a tract straddling one fallen market and one steady one shows neither.
Blank where Zillow is silent. Around 7,000 ZIP codes carry no published value and are left empty rather than filled from their county.
References#
- 1Zillow Home Value Index Methodology, 2019 Revisionhttps://www.zillow.com/research/zhvi-methodology-2019-deep-26226/