S&P Case-Shiller: The Housing Price Index Hoax

Today I was driving in my car listening to Rush Limbaugh and he was talking about the housing market having taken a double dip. He was on a rant about what a terrible economy we are in. Of course his objective was to criticize the President, but the basis for his argument drove me to write this blog. Its time everyone understood just what Case-Shiller is.

His argument was fueled by the recent news released by the Case-Shiller index that housing prices have hit the double dip in this recession. But Case-Shiller is not an all encompassing housing index. And this is where it really gets my goat. He’s preaching fear and using an index that faulty, at best, to back him up. If you live in Louisiana and you heard his argument you might think that it would apply to you. After all, Case-Shiller is a S&P index and it’s a national housing price index… right? Well sort of.

Yes, it’s national. It takes data from 20 markets across the country. How many of the data sets used by Case-Shiller come from Louisana? NONE! Other than Dallas and Denver the other 18 markets are either on the east coast or the west coast, so the Case-Shiller index is representative of our coastal regions but I take issue with this being the end-all and be-all of housing price indexes. You cannot live in Louisiana and be concerned with Louisana’s economy and look at Case-Shiller for guidance. And if you are looking to Case-Shiller to tell you about the housing market in Baton Rouge, then your are spot out of luck.

So the next time you hear someone on the news preaching about the state of our economy look a little harder at what they really want you to hear and where they get their data. The housing market is like the weather. A bad storm in Las Vegas means nothing for the weather in Baton Rouge. It’s the same with housing. A down housing market in Las Vegas means nothing with regards to the housing market in Baton Rouge. And even if I were looking at the housing market in Las Vegas I wouldn’t suggest looking at Case-Shiller which pulls data from 19 other markets. Case-Shiller creates a false notion that the housing market is “national,” but instead housing markets are “local”. There’s a reason why the appraiser doesn’t use comparables from Denver to value your house in Baton Rouge.

Personally, I suggest taking that news article about the Case-Shiller index and tossing it in the trash. Get real data about your local housing market from your local REALTOR. To learn about the Baton Rouge market, call me. I keep a chart that tracks values from 2002 to present. Now that’s real data!

-Bridget Fredericks, REALTOR
Home After Home: 225-341-BRLA or 225-341-2752
Licensed in Louisiana, USA

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