Last week, Standard & Poor’s released its Case-Shiller Index for December 2010. The index is a home valuation tracker, meant to measure the change in home prices from one period to the next.

December’s Case-Shiller Index showed major devaluations nationwide. As compared to December 2009, on a year-over-year basis, home values fell in 18 of the Case Shiller Index’s 20 tracked markets, and the U.S. National Index dropped 4 percent overall.

The retreat puts December’s home values at similar levels as compared to early-2003.

That said, buyers and sellers in the Philadelphia marketplace would be wise to take the findings lightly. The Case-Shiller Index is inherently flawed. As such, its results are neither practical — nor relevant — to everyday Americans. If you have read this blog before, you know that our market is not included in the Index, and in this case is opposite to the market information which shows that our market area had a 2.9% increase in 2010 over 2009.

There are 3 Case-Shiller flaws, in fact.

The first flaw is the index’s limited sample set. Wikipedia lists 3,100+ municipalities nationwide and we can be certain that real estate is bought and sold in all of them. The Case-Shiller Index, however, measures just 20 of them. That’s less than 1% of all U.S. cities. And then, within those tracked cities, Case-Shiller reports an average, lumping disparate neighborhoods and streets into one big number.

The “national figures” aren’t really national, and the “city data” doesn’t apply to your home, specifically.

The second Case-Shiller Index flaw is how it measures home value changes. The index only consider at “repeat sales” of the same home, so long as that home is a single-family, detached property. Condominiums, multi-family homes, and new construction are ignored in the Case-Shiller Index.

Because distressed properties account for such a high percentage of resales lately — 36% in December –foreclosures and short sales skew Case-Shiller Index worse.

And, lastly, the Case-Shiller Index is flawed by “age”. Because it reports closed sales a 60-day delay, December’s Case-Shiller Index is measuring the values of home sales contracts from September and October. The Case-Shiller Index, therefore, is a snapshot of the not-so-recent past, and does little to tell us about the next 60 days.

Overall, the Case-Shiller Index is helpful tool for economists and policy-makers, but it doesn’t do much good for individual homeowners across the city of Philadelphia or anywhere else. For accurate, real-time housing data in your local market, talk to a real estate professional instead.

Standard & Poors released its Case-Shiller Index Tuesday.  The index is a monthly home valuation report from select cities and among the private sector’s most popular home pricing models.

In reviewing the April Case-Shiller Index and its accompanying analysis, it appears that the housing market’s rebound is gathering momentum.

In the index’s 20 tracked cities:

• 18 of 20 improved from March to April 2010
• Versus April 2009, home prices are up nearly 4 percent
• The two “down” cities from April — Miami and New York — are off just 0.5% and 1.0% annually, respectively

Furthermore, as another sign of strength, San Diego, a city in which homeowners have lost a lot of equity since 2007, has now shown 12 straight months of home price improvement.

However, the Case-Shiller Index must be kept in context. It’s far from perfect.

For one, the index reports on a 60-day delay; it’s only now showing data from the end of April, when the federal homebuyer tax credit was expiring. Home sales have been weak since then it’s been reported.

And second, the Case-Shiller Index is limited to just 20 cities nationwide. Therefore, the index doesn’t consider every home sale in every American city — it only considers a select few. Many more U.S. homes are excluded from the Case-Shiller Index than are included.

But, despite its flaws, the Case-Shiller Index remains important with respect to economic analysis. Much like the government’s Home Price Index, Case-Shiller helps to identify broader trends in housing that shape government and monetary policy.

Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas.

Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase.  The other 19 markets averaged a 1.23 percent decline between January and February.

However, that’s not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.

Unfortunately for active home buyers and sellers, year-over-year data isn’t all that helpful when making a real estate decisions. It’s the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.

The rosier, annualized data published this past week just doesn’t capture the reality of what was the February 2010 market.  And even then, the data is somewhat useless because it’s from February and May will be upon us next week.

Case-Shiller is on a 2-month lag — hardly reflective of the “right now” of real estate in Palmyra.

When you’re looking for real estate data that actionable, consider using sources that are more “real-time”. A real estate agent may be the right place to start.  Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.

Standard & Poors released its Case-Shiller Index Wednesday. The report shows that, on a seasonally-adjusted basis, between December and January, home prices rose in more than half of the index’s tracked markets.

The strength of this month’s Case-Shiller report, however, should be put in context.

For one, the report is on a 2-month delay; it’s showing data from January, before the start of the Spring Buying Season and before the rush to beat the tax credit. Anecdotally, buyer interest has been strong since, leading to the types of multiple offer situations that drive home prices northward.

In other words, home values may be even higher than what’s reflected in the January Case-Shiller data above.

Furthermore, as you may remember from reading earlier posots. the Case-Shiller Index measures home values in just 20 cities nationwide and they’re not even the 20 biggest cities. Houston, Philadelphia, San Antonio and San Jose are specifically excluded from the report and each ranks among the country’s 10 most populous areas. For that reason, the accuracy of the index has always been suspect as far as I am concerned.

Despite its flaws, though, the Case-Shiller Index remains important. Much like the government’s Home Price Index, the private-sector report helps to finger broad housing trends and housing is still considered a keystone in the U.S. economic recovery.

Even if it’s two months slow.

Using data compiled in December, Standard & Poors released its Case-Shiller Index Tuesday.  The report shows home prices down just 2.5% on an annual basis, a figure much lower than the 8.7% annual drop reported after Q3.

According to Case-Shiller representatives, the housing market is “in better shape than it was this time last year”, but some of the summer’s momentum has been lost. 15 of 20 tracked markets declined in value between November and December 2009.

Meanwhile, it’s interesting to note the 5 markets that didn’t decline — Detroit, Los Angeles, Las Vegas, Phoenix and San Diego.  Each of these metro regions were among the hardest hit nationwide when home prices first broke.  Now, they’re leading the pack in price recovery.

For some real estate investors, that’s a positive signal.  But we also have to consider the Case-Shiller Index’s flaws because they’re big ones, and because you’ve heard me complain about them in the past whenever I quoted it (I feel a need to be consistent in my issues with the index and the way its calculated)

As examples:

1. Case-Shiller data is reported on a 2-month lag
2. The Case-Shiller sample set includes just 20 U.S. cities
3. There’s no “national real estate market” — real estate is local

That said, the Case-Shiller Index is still important. As the most widely-used private sector housing index, Case-Shiller helps to identify broader housing trends and many people believe housing is a key element in the economic recovery.

I have often said that we will only recognize the recovery in retrospect because that has been the case in the past. The first indicators of changes in the economy, and the articles about them are often ignored in the face of “common knowledge”, but they are often harbingers of what is to come. If the markets that led the housing decline will lead the housing resurgence, December’s data shows that full recovery is right around the corner.