In this episode, David Lykken interviews Allan Weiss, founder and CEO of Weiss Analytics, about his pioneering work in real estate analytics, including the development of the Case-Shiller Index. Allan discusses his latest innovations, ValShare and ValPro, which allow homeowners to sell portions of their home equity and provide AI-driven property valuations, respectively. These tools offer new ways for homeowners, realtors, and lenders to manage risks, accurately price properties, and enhance real estate transactions. Allan’s insights highlight how these advancements are set to transform the real estate industry.

[David]  Listeners, we’re in for a real treat today. What we try to do on Lykken On Lending is bring you information about what’s happening, things that are going to be entering into the market, opportunities that are entering the market, services that are entering the market. And today we’re going to be talking about some new opportunities for you that will give you an advantage as you’re selling into the marketplace. Joining me is a good friend, a business partner, a co-host on our TV program together, Allan Weiss. Allan, good to have you here.

[Allan] Good to be here.

[David] Allan is the founder and CEO of Weiss Analytics, but he has got quite a journey that I’m really excited to share with you. We’re going to start with his journey and this is all tying to what he’s doing now. I talk about what is your passion when you identify your passion. You really start identifying what your purpose and what your why is nd so I’m really excited to share with you, our listeners, Allan’s why and what it can do for you. So pay attention. Allan, let’s start with You and your background, you started a very significant initiative while you were at Yale. If you could share it, you were already had gotten your undergraduate degree in computer programming or a computer science, I believe. And then you went to Yale, pick it up from there and share what you did with professor Case and Schiller.

[Allan] Sure. I was in a two year management program at Yale, simple equivalent to an MBA. But I already went in with the mindset that I was very interested in real estate. I’d already had a career for a few years in technology. I’d, undergraduate was Computer Science and Physics. I’d worked for Atari, the video game company, and then I went over to a much more buttoned down culture at Arthur D. Little. But I started to experiment with real estate development in my late twenties. Me and a friend bought a three family house and we were working on converting it to condos and that was the foundation I was standing on when I got to Yale, before that technology work and then beginning to get into real estate and the two were merging in my mind at that point It was long before anyone had the terms like FinTech or PropTech or any of that stuff and I wanted to figure out two things. How did people who had any concern about real estate whether they were a homeowner professional? How did they A. Know what’s going on and B. What were the financial tools to do something about it? Because it’s like a really important thing. Everyone deals with this. That was the foundation mentally and in terms of my experience that got me to that point.

[David] What’s really interesting about this is you were most concerned about, as we’ve talked about this, but I’m buying this home. I’m, we’re putting a lot of money into this property. Is it going to go up or is it going to go down? What are the trends that’s where you got introduced when you were contemplating, I know where the stock market’s going. I can see where all of those trends, but I can’t see where the housing market is going, and that was troubling for you. If I recall your story and you go, there’s got to be a solution. And that’s where Professor Case came into the situation or was it professor Schiller?

[Allan] Professor Schiller. Yeah. What happened was, you think about it. I had done some investing in real estate and I was already like an information data kind of person from Computer Science and Physics work and Education, and then we’re at Yale and we’re learning about you should hold a diversified portfolio and here’s all these information about stock markets and diversification and all the things you should do to manage your portfolio. And I’m thinking, wait a second I’m pretty average here. I owned a place at the time, I had a place that’s of significant value, but almost all of it was in a mortgage and so I was very leveraged and I knew I wasn’t very diversified and I was asking professors, so how does the average, we’re all told to own a home. How does the average person diversify? We’re also told we’re supposed to diversify, and it’s fantastic to diversify, and that’s what everyone should be doing. How am I supposed to own a home that I owe 90% on and diversify? Not just me, but I don’t know, 50 million other homeowners. What’s going on here? These two don’t go together. How do we make these two go together?

[David] That’s really interesting, if I understand someone made you aware, you need to go talk to Professor Schiller over in the Economics department. Take the story. How did that meeting go? And I know you, counting to know you and which is really out of character for you, because you’re a little bit of an introvert.

[Allan] I’d say so in some way. Yeah, I can be both. If I get excited, like I said, my favorite topic, I can pretty much do anything socially, but normally, I drift back towards my little math world, which is, where I meditate on things and think of what seems to be missing in the world. I go back and forth between the two, going in that state, dealing with this seeming contradiction, own a home, own diversified portfolio, but borrow 95% or 80% to own the home. Those don’t go together. How do you find out what’s going on? So I even know that’s a dumb idea or not.

[David] You and your friend bought a house, you’re leveraged in that house Big time. And it’s your primary investment and you’ve been studying about diversification, the importance of diversification. You’re going, these two aren’t fitting together really well for me. How can I solve this? That’s which began to create what has turned out to be a life’s work for you. Get into that and how you met Dr. Schiller.

[Allan] Yeah, if you’re going to diversify, you have to know what you’re diversifying. It started with information. There’s two questions. Like I want to diversify A. What is this asset I’m doing. Is it rising? Is it falling? Is about to rise. I got to know what I own.

[David] You got to know what that house you bought is good doing. And you did

[Allan] Exactly. And even then, you could look up a stock portfolio. You could look up the S&P 500, but you can’t look up what my house is doing. There’s nothing like that out there at that time, so I asked professors at the School of Management. They said, talk to Bob Schiller in the Economics department. I walked over to his office, knocked on his door and said, I hear you have these indexes. Can you help me? This is what I’m trying to do. Trying to understand rationalizing diversification and home ownership. He said, sure. And we started to work together.

[David] That’s so exciting. And he handed you a paper and that really started on the, what became The Case Schiller Weiss corporation, and it really started giving indexes about communities, but it was not granular. Talk about it was a great improvement over what was, which was nothing. There was nothing before. Now that you guys created, talk about that briefly, and I don’t want to spend a whole lot of time on, but I want to explain conceptually what that was. Most people that are listening to this know what the Case Schiller index is, but so fill us in a little bit of how this began to solve a problem, but also the deficiencies in that.

[Allan] Sure thing. What we started with was a paper that was called new indexes for four cities, and it covered four Metro areas with a very clean data set and a couple of years after I graduated from Yale, this whole issue of diversification and risk was on my mind because this was during a period of time when home prices had fallen severely in the Northeast and Southern California. And I saw my friends suffering. The people had bought condos that were now underwater and then now they’re living in a house. They bought a house and they’re raising a family, but they’re diligently trying to pay the mortgage on the condo by renting it out as they’re underwater. This is a risk. There’s no way people can manage this risk. We have fire insurance. We have life insurance. We have all kinds of insurance. Why isn’t there insurance for this thing? So this was bothering me. I thought of this idea of home equity insurance. I called Bob Schiller two years after I graduated. And I said, Bob, I feel like there’s still something missing here. We should have something called Home Equity Insurance. And he said I’ve been thinking about something along the similar lines. I think there should be a futures market and home prices. We agreed that we would form a company that worked on both things and that company was Case Shiller Weiss because he introduced me to his academic partner, Chip Case at Wellesley College. The three of us formed Case Shiller Weiss to address just that, to create home equity insurance and a futures market in single family