Let’s have a look at how the year 2012 treated house prices, as
measured by the Case-Shiller index.
This home price indicator lags by a couple months, but it offers a
couple advantages. First, it uses repeat sales of the same homes, so
it is more accurate than simply looking at a median price, which
could be distorted by a change in the quality of homes sold.
Second, it breaks the sold homes into three price tiers, which
allows us to separately analyze price changes for low-, medium- and
high-priced homes. (The tier cutoffs are determined by simply
splitting the sold homes into three equal-sized groups — the most
expensive one-third of homes sold goes into the high-priced tier,
Here is the Case-Shiller index, for the three tiers as well as the
combined index in black, starting at the early-2009 price trough: