The Real Estate Market Index

The Real Estate Market Index (“REMI”) combines sales price, sales volume and days on market into a summary measure of market activity or liquidity. The REMI, which rises with price or volume and falls with days on market, is more sensitive to market sentiment than indices based on price alone, e.g., the Case-Schiller Index. The REMI is useful to people who want a measure of market liquidity. Data from over 19,000 sales that occurred be-tween January 2000 and November 2009 in Mission Viejo, California illustrate the calcula-tion, calibration and application of the REMI. Economists describe markets as a place where supply and demand meet, the upward sloping supply curve intersecting the down-ward sloping demand curve at an equilibrium price where the quantity supplied equals quantity demanded. Although markets are rarely in equilibrium—supply and demand are constantly changing—this concept, this use