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16 years ago

There is one methodology
There is one methodology point I am concerned about. The choice of price cutoffs (two “tertiles”) is based on the first sale price, not the most recent. I would think this blurs the tranches considerably, because the first sale dates are spread across time – during which time aggregate values were changing!

For example, House A sells for $500K now, first sold for $500K a year ago. House B sells for $500K now, $100K ten years ago. Both were mid-market houses then and mid-market houses now. Is House A in the mid third ($500K) and House B in the bottom third ($100K)?

Surely the smart guys at S&P/C-S looked at which third the house was in at first sale, not its actual price, and the price points shown are for the recent sales price – even though that does not directly factor in to the grouping.

– Eric

16 years ago
Reply to  Rich Toscano

I sent an email inquiry to
I sent an email inquiry to one of the fellows listed in the back of the methodology document.

The fact that the tertiles are quoted in dollars implies using the latest sale.

If houses are classified as low, mid, or high based upon first sale, then the dollar tertiles are approximate numbers – unless there is no drifting between thirds, which seems unlikely. Yet the numbers are precise: $679K, for example, implying they are not approximate.