Machine learning model forecasts housing market trends

Milliman developed several integrated machine learning modules to leverage hundreds of local data series to evaluate the current state of the housing markets and produce estimates of future trends. The modules are components of the Mortgage Platform for Investments and Reinsurance (M-PIRe); M-PIRe is a cloud-based platform designed specifically to evaluate mortgage market trends and credit risk transfer deals.

The modules estimate:

• Future mortgage demand by geography, product, credit quality, and originator
• Home price conditions (opportunities and risk)
• Credit quality of mortgage originations with consideration of borrower attributes, underwriting and product features, and economics

This report by Jonathan Glowacki provides the results of the home price conditions model as of October 2018. The report also compares housing markets in Denver and San Francisco to demonstrate how the model works and what factors are considered.

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