Today’s Case-Shiller post is the last installment in our brief series on the Case-Shiller Home Price Indices.

Finally, one of the most significant errors we see related to the index is an error in interpretation – that being the inference that as the Case-Shiller goes, so goes the nation’s entire housing market.  Emerging market investors who understand and follow real estate market cycles know better (or should), as should the economists who routinely ride this very assumption to gloomy grounds. 

A bit of history is also in order; the index was derived to track the valuation changes in housing to guide investment, not deed holding real estate investment, but “Wall Street” based real estate investment. 

While some proffer that the media’s consistent negative mantra with regard to the CSI, particularly in these times of impressive CSI and actual real home declines, has a partisan tinge to it.  We doubt that (though I guess it could be possible); it’s our assumption that the media’s focus on the CSI data has to do the old theory of “if it bleeds, it leads”.  These days there’s plenty of “bloody” economic news to go around. 

We agree with those who have called the Case-Shiller Home Price Indices an “econometric marvel”, and urge those who use the data in whatever manner to understand most thoughtfully the sword of information they wield. 

No single metric, not even the hallowed Case-Shiller Home Price Indices, tells the entire story with regard to housing’s woes. 

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