What the Fed missed in the price run-up in housing in the early 2000's was the increasing contribution of land values to sale prices in certain Metro areas. Same address sale figures had become distorted because zoning restrictions had effectively stopped more efficient uses of property. The Case-Schiller index should have been named "Residential Building Lot Prices Induced by Local Control Factors."
What the Fed missed in the price run-up in housing in the early 2000's was the increasing contribution of land values to sale prices in certain Metro areas. Same address sale figures had become distorted because zoning restrictions had effectively stopped more efficient uses of property. The Case-Schiller index should have been named "Residential Building Lot Prices Induced by Local Control Factors."