I have a question regarding CSI methodology. I know CSI is based on sale-pairs of same houses, thus it is better than regular median. The question is: does each sale-pair has an equal weight in the index? if there are more sale-pairs in one location (e.g. oceanside) than in another (e.g. CV), will the CSI index be more heavily influenced by the first location? If this is true, the CSI is also biased by sale mixed like plain median, just in a different way.
Standard Case-Shiller methodology assigns a weight to each pair that is equal to the first sale price. This makes them slightly biased towards high-end properties. I don't do that, I give the same initial weight to all pairs. Then there are some further weight adjustments.
Here I periodically publish my calculations of a "home price index" for San Diego and some of its suburbs. It's influenced by S&P Case-Shiller index. My numbers are about 3 months ahead of Case-Shiller and they give you more insight into geographical variations of house prices across the county.
You can click here to get some "behind the scenes" technical information on how this index is calculated.
2 comments:
I have a question regarding CSI methodology. I know CSI is based on sale-pairs of same houses, thus it is better than regular median. The question is: does each sale-pair has an equal weight in the index? if there are more sale-pairs in one location (e.g. oceanside) than in another (e.g. CV), will the CSI index be more heavily influenced by the first location? If this is true, the CSI is also biased by sale mixed like plain median, just in a different way.
Standard Case-Shiller methodology assigns a weight to each pair that is equal to the first sale price. This makes them slightly biased towards high-end properties. I don't do that, I give the same initial weight to all pairs. Then there are some further weight adjustments.
http://www2.standardandpoors.com/spf/pdf/index/SPCS_MetroArea_HomePrices_Methodology.pdf
In either case, if Oceanside is selling and Carmel Valley is stagnant, that will in fact depress the city average.
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