Drunkle – The price breakpoints are as of August 2007. It means that a given home’s category was determined as of that date (either by the sale price if it sold in Aug 2007, or the imputed price based on the HPI), and it will never jump categories regardless of where its price goes.
The problem you describe, of a home jumping categories, would happen if they were measuring median price or something. But they can avoid it because they are comparing same-home sales, so they can “pin” a given home into one category even if the price changes.
In retrospect, I’ll bet there was a much better way to explain that. 🙂
Rich
PS – As for the weird breakpoints, I assume they are just using a distribution of some sort so that there are an equal number of homes in the hi and low categories, or something.
PPS – All of the above is speculation on my part. But I’ll bet it’s true.
