Two house price indices came out this week--the Case-Shiller and the OFHEO. Case-Shiller is down, while OFHEO is flat (quarter-to-quarter). It is natural enough to wonder why.
The two indices have three principal differences:
OFHEO has only houses financed with conforming mortgages (those with balances of less than $417,000). CS uses all sales.
OFHEO includes appraised values for refinance loans. CS looks only at sales.
OFHEO includes houses that may have been substantially improved from one sale to the next. CS throws those houses out.
In short, CS is better. The only advantage OFHEO has is that it covers the whole country--CS only covers the 20 largest metropolitan areas.
The Case-Shiller C-20 covers the 20 MMAs, but the National Index covers all 9 census divisions and is hence somewhat broader. The same conclusions apply, though...
ReplyDeleteOFHEO is producing an index from purchases only. It's published at the national and state level but it too is still showing no decline into the 2nd quarter. Since OFHEO excludes the non-conforming loans, maybe the high-end of the market is falling faster. The issue of improvements are still there.
ReplyDeleteThe purchase data is available at:
http://www.ofheo.gov/media/pdf/2q07PurchaseOnlyNationalSummary.xls
http://www.ofheo.gov/media/pdf/2q07hpistspo.txt
Both are good points. But the HPI (which includes appraisals) seems to be the index on which the press focuses.
ReplyDelete