Case-Shiller Index : Summer 2011 Home Values Rebounded

As more U.S. cities shows signs of a housing rebound, would you believe that Detroit is leading the way?

Home Values Rising In Most Case-Shiller Cities

Each month, Standard & Poors releases its Case-Shiller Index. The Case-Shiller Index measures home price changes from month-to-month, and year-to-year, in 20 select U.S. cities. S&P also reports a “national” index; a composite of the values from said cities.

This week’s Case-Shiller Index showed an increase in 17 or the 20 tracked markets between June and July 2011, and a 0.9% rise in home values overall.

Of all the tracked cities, only Phoenix and Las Vegas fell. Denver was flat.

But, perhaps most interesting was that, all of the Case-Shiller cities, Detroit posted the strongest 1-year, home price improvement.

As compared to July 2010, Detroit home values are higher by 1.2 percent. This bests even Washington, D.C. — long-believed to be the nation’s healthiest housing market.

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The Flaws Of The Case-Shiller Index

The strong Case-Shiller data is reason for optimism in housing. However, we must be careful with our drawn conclusions. This is because — as with most “home price trackers” — the Case-Shiller Index is flawed.  In several ways, really.

The first Case-Shiller Index flaw is its limited scope. Although it’s purported to be a “national” housing index, the data that makes up the Case-Schiller Index is sourced from just 20 U.S. cities. These 20 cities represent just 0.6% of the more than 3,100 municipalities nationwide.

That’s hardly a full sample set.

Another Case-Shiller Index flaw is that the sample sets include single-family, detached homes only. Condominiums, multi-unit homes, and new construction are specifically excluded from the Case-Shiller Index.

In some markets — Chicago, for example — “excluded” home types may outnumber included ones. 

And, lastly, the Case-Shiller Index is flawed in that it takes 2 months to gather data and report it. It’s nearly October, yet we’re still discussing the real estate market as it existing in July.

For buyers and sellers, July in ancient history. 

Get Better Real Estate Data

The Case-Shiller Index is useful for tracking long-term housing trends, but does little to help people like me and you evaluate our current local market conditions. For that, we use real estate agents. Real estate agents can give accurate, real-time data. The Case-Shiller Index cannot.

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