Read the fine print... S&P Case-Schiller Data Inaccurate and Skewed!

Education & Training with @properties

 It seems that EVERYONE wants to jump on the doom and gloom of the Real Estate Market nowadays without ever REALLY figuring out what the data means.  The post jumped out at me yesterday from the Inman Blog.  "Case-Shiller: Home prices drop in 19 of 20 metros"

Now typically I take everything with a grain of salt, but yesterday I just about jumped out of my chair.  After months and months of compiling information for one of the most in-depth market reports of Chicago ever, (See Report Here) I knew for a fact that Chicago HAD TO BE that one metro area...  Well it wasn't and I was p*ssed.

The data, accoring to Inman and the S&P website stated that, "A monthly home-price index that tracks 20 major U.S. metro areas dropped 12.7 percent in February compared to the same month last year.  Nineteen of 20 metro areas in the monthly S&P/Case-Shiller index experienced annual declines in February, with double-digit percentage declines in 10 metro areas."  (Read their full press release here)

Then continued with, "There is no sign of a bottom in the numbers," said David M. Blitzer, chairman of the Standard & Poor's Index Committee, in a statement.

The worst areas, according to the report included; New York, Miami, Chicago, Las Vegas, and more.  That's when I got to thinking... New York and Chicago???  What Gives?  I always thought these were two of THE MOST stable or slide-resistant areas in the U.S.?  Don't I know for a FACT according to exhausted research on my own, that Chicago's average price grew over 2% as a WHOLE?

So then I took a look at their information and what they actually include in their data.  (View the Full FAQ Here)  They state that to be included in their report, homes must fall into the following criteria:

2. What types of homes are included in the index calculations?

To be eligible to be included in the indices, a house must be a single-family

dwelling. Condominiums and co-ops are specifically excluded. Houses included

in the indices must also have two or more recorded arms-length sale

transactions. As a result, new construction is excluded.

So, in major metro areas like New York and Chicago, where the attached vs. detached home sale ratio is astronomically skewed, NONE of the condos, town homes, or coops are included?  What the heck does this data include then for Manhattan or the Chicago Loop neighborhood???

Unfortunately, this is just another example of a major company with huge ties to the media releasing semi-represented data and furthering the fear of American Home Owners.  Do the right thing in this... all of you.  Make sure that you know the facts.  Make sure you share them with your clients.  And when you see things like this that don't support your research, make sure you call them out to everyone you can. 

Matt Dollinger

"Differentiation Through Your You Factor"


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Tiffany Wilson
eReal Estate Corp - Redondo Beach, CA
SFR, First Time Home Buyers & Investors
The media...  don't get me started!  This is just another fine example.  I'm going to bookmark this post for future reference - to show those who claim that the media is telling them not to buy, that what the media reports is usually skewed.
Apr 30, 2008 06:01 AM #1
Diane McDermott
Realtor®, GRI, Landis e2 Real Estate, LLC - Charlotte, NC
Charlotte NC Real Estate Market
Matt, exceptional points, you're right that stats are only as good as the data and many don't consider what data was used. In my area, the "region" includes many outlying counties/towns, yet it's all grouped as "charlotte". I can only imagine there's also disparity in how other markets would rate if the data was refined and actually specific. Sounds like you know your market better than some general national index, it's a shame that most consumers don't consider what data was used.
Apr 30, 2008 06:06 AM #2
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

I read on about a week or so ago about how St. Louis, my home market, was the 4th riskiest real estate market.  I was like, "Whatttttt?"  It's not rocking here, but our economy is diverse, our cost of living is relatively low and while not rocking, our real estate market is least a go figure...

Maybe we can't believe everything that we read???


Bob Mitchell

ValueList Real Estate Services, Inc. 

Apr 30, 2008 06:24 AM #3


Turns out case shiller was right and you were wrong. Oh well. If statistical methodology is prone to bias, imagine what owning a home must do to skew your views about what your real estate is worth.

Sep 05, 2010 05:29 PM #4
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