OFHEO Study Documents Difference Between HPI and S&P/Case Shiller Housing Price Index

"Recent Trends in Home Prices: Differences across Mortgage and Borrower Characteristics," by the Office of Federal Housing Enterprise Oversight (OFHEO) attempts to explain differences between the two indexes. It appears that borrowers characteristics are correlated with appreciation patterns. Homes with higher-risk mortgages generally have experienced greater price declines in recent periods.

In central California, for example, home prices for low-FICO homes declined 23.7 percent between the first quarters of 2007 and 2008. By contrast, prices fell 19.7 percent for high-FICO properties. In other areas of California, the difference in the depreciation rate was slightly greater; the value of high-FICO properties fell approximately 15.8 percent, while prices of low-FICO homes fell an estimated 22.4 percent.

See previous post Pick Your Home Price Index: Comparing the HPI with the Case-Schiller Index