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Furthering his new “take no prisoners” approach, the National Association of Realtor’s Chief Economist, Lawrence Yun, aims his guns at the big boys, in a column appearing on NAR’s website, last week.

It starts out as a criticism of the two major “home price trends” indices – the S&P / Case-Shiller index and the Office of Federal Housing Enterprise Oversight (OFHEO) index.

[T]he Case-Shiller price index — which has been gaining more media coverage as of late — covers only 20 markets. Most of these 20 markets coincidentally tend to be located in California, Florida, and other down markets. As a result, the index shows that most of the 20 markets are experiencing price declines.

I agree, hard to draw conclusions about the US market, as a whole, using such limited data. (I’m not saying the entire market contradicts what’s happening in those 20 markets, mind you, just questioning the amount of influence the index has …)

OFHEO’s data is more inclusive – it surveys home prices in 287 local markets.

Trouble is, the data you get from OFHEO is dated – we’ve only just received 3rd-quarter, 2007 results. (They weren’t good, btw.)

Of limited use, it is.

In my opinion, just as big a weakness is that they only use single-family home sales. Neither includes condominium sales, which, of course, make up the majority of sales in major metropolitan areas.

Those interested in getting the full picture of the current state of the residential real estate market should consider tracking data released by Radar Logic.

Radar Logic’s product seems much more useful than the other two.

How does it differ?

RPX prices that represent the price per square foot of actual residential real estate trades in 25 U.S. Metropolitan Statistical Areas, a government listing of the largest urban areas, as well as a 25-city composite that is translated into a daily market price.

More importantly:

Radar Logic’s index is more encompassing than the S&P / Case-Shiller Home Price Indices in terms of geographic areas and types of properties included in the index. It also prices daily, whereas the S&P index prices monthly.

Even more interesting than Yun’s analysis of the indices is his criticism of Robert Shiller, he of “irrational exuberance” fame, and the media’s “star” performer when it comes to forecasting the US real estate market.

Another factor that rarely gets attention is that Dr. Shiller, a Yale professor, has a side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller’s bank account.


Everyone criticizes NAR for being cheerleaders, saying they are only trying to put more money into their own pockets.

Funny to see NAR questioning someone else’s motives.

Is it a legitimate criticism?

Source: Competing Home Price Data: the Inside Story – By Lawrence Yun, National Assocation of Realtor’s Chief Economist

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