alemboy

Which is the Most Accurate Home Price Index?

Interesting try by Mr. Blackman, but unpersuasive. Here's why. In some markets, prices did in fact begin to fall in mid 2006, but in many markets, that did not occur (nor has the drop been as extreme) until early 2007. Case-Shiller is fundamentally structurally biased towards markets that were overly hot, became excessively expensive more quickly, the market turned, and now will be overly cold and vulnerable. As such, it is not surprising that it does a better job describing those markets - for this one particular market downturn. The question is, how do you weigh amongst the entire body of US housing markets? That matter isn't proved here, it is still entirely open for debate. And any of the indices are probably going to have varying accuracy in different types of market conditions going forward...we are a long way from establishing a "one size fits all" index.

More minorly, the fact that Case-Shiller matters to a futures market is completely and utterly irrelevant in trying to assess it's historical accuracy. Futures markets are nothing more than good educated guesses about the future, do not always turn out to predict accurately (if they did, life would sure be easy!), and as such are totally inappropriate for this kind of validation test.