The Case Shiller 20 city index is reasonably accurate, but unrepresentative. House prices in these cities are twice the national level. While the Case Shiller index declined 34% since the peak in 2006, prices outside these regions declined only 13%. This is summarized below.
Price Indexes: Case Shiller, FHFA and Heartland
The Heartland index (GREEN) is the sum of FHFA (Federal Housing Finance Administration) data for regions outside the Case Shiller 20 SMAs. It contains volatile urban and upscale SMAs, but it consists largely of lower density areas. The 20 Case Shiller SMAs (BLUE) and FHFA data for these SMAs track with reasonably consistency. Case Shiller’s national index contains only urban areas so it is meaningless. The FHFA index extended with FHA and private sales is used as the national index (RED).
Case Shiller peaked at 258% of the price at the beginning of the cycle in 1997, while the Heartland peaked at 136%. When measured by Case Shiller, the house purchase tax credit and higher loan limits raised prices, but in the invisible Heartland markets they had little effect.