Is the Real Estate Market Still "Hot"?

In the comment section to the 2007 prediction post, Lou and I debate whether the real estate market is still bubbling. Apropos of which, I offer the following paper by David Zetland, The Hot and Not-so-Hot Index of Real Estate Marketplace Trends:

ABSTRACT: Realtors, home owners and home buyers want to know whether the real-estate market is hot. Most would agree that the market is hot when prices and transaction volume are high and the time it takes to sell a house (days on market) is low - relatively speaking. I propose, explain and calculate a Hot and Not-so-Hot Index (HANSHI) that combines these three characteristics into a summary measure of market activity.

The HANSHI can be calculated for any set of home sales (by city, builder tract, zip code, bedrooms, etc.) in two, different ways: The Moving-Average HANSHI compares activity in one month to the year it completes; the Seasonal-Average HANSHI compares the current month to the same month in other years. A higher HANSHI indicates a hot market; a lower HANSHI indicates a not-so-hot market. The HANSHI can objectively clarify the status and trends in any real estate market.

In a sample calculation using over 15,000 transactions in Mission Viejo, California, it is clear that the local market has not been hot since October, 2005.

Now we just need somebody to run the numbers for, say, Los Angeles.