Standard & Poors released its March 2012 Case-Shiller Index last week. The index is meant to measure changes in home prices from month-to-month, and from year-to-year, in select U.S. cities.
According to the report,Â home values roseÂ in 12 of the Case-Shiller Indexâ€™s 20 tracked markets, and one market remained unchanged.
Of the Case-Shiller markets, Phoenix, Arizona posted the largest one-year gain, climbing 6.1 percent. Atlanta, Georgia posted the largest one-year loss. Values falling more than seventeen percent there year-over-year.
Overall, the Case-Shiller Index was relatively unchanged in March as compared to the month prior, but down nearly 3 percent on an annual basis. Nationwide, says Standard & Poorâ€™s, home values are back to the levels of late-2002.
Donâ€™t be overly concerned, however.Â Though widely-cited, the Case-Shiller Index is a flawed and misleading metric. Itâ€™s methodology almost guarantees it.
The first flaw in the Case-Shiller Index is its limited geography. Despite there beingÂ more than 3,100 municipalitiesnationwide, the Case-Shiller Index tracks just 20 of them.Â Theyâ€™re not the 20 largest ones, either.Â Houston, Philadelphia, San Antonio, San Jose are specifically excluded from the Case-Shiller Index and each is among the Top 10 Most Populous Cities in the United States.
Minneapolis (#48) and Tampa (#55), by contrast,Â areÂ included.
The Case-Shiller Indexâ€™s second flaw is that only tracks the sales of single-family, detached homes. Sales of condominiums and multi-unit homes carry no weight in the index whatsoever â€” even in cities such as Chicago and New York in which condos can account for a large percentage of the overall real estate market.
And, lastly, when the Case-Shiller Index is published, itâ€™s published on a two-month delay. Buyers and sellers in Brooklyn, NY donâ€™t need housing data from two months ago â€” they need data from today. The Case-Shiller Index tells us what housingÂ was, in other words. It doesnâ€™t tell us how housingÂ is.Â
Buyers and sellers need real-time, actionable information. You canâ€™t get that from the flawed Case-Shiller Index. For more accurate, relevant real estate data, talk to your real estate professional instead.Â