More reason to give credence to the Warren Buffett quote:

Beware of geeks bearing formulas

I’ve said for a while that real estate bubble still has a long way to fall, and Reggie Middleton‘s dissection of how the Case Shiller Index is calculated continues to add supporting evidence we are no where near the bottom in real estate prices.

The Case Shiller Index leaves out much of the portions of the housing market that are currently falling and in distress right now.

The Case Shiller Index doesn’t account for many variables:

• Bank owned real estate
• Real Estate Investor flips
• Condos
• Short term prices (< 1 year)
• Anything not a single family or semi-detached house.

Most of those things that are not included in [the Case Shiller model], are what is dragging down much of the market today.

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As always, if the economic models, especially those that have a cult like following, do not adequately model the contemporary environment, then they need to be allowed to evolve to adequately model contemporary times, or be pushed aside for models that do.