Real estate economists Michael Sklarz and Norm Miller, co-founders of Collateral Intelligence, say the widely followed Case-Shiller home price index has exaggerated home price declines for most homeowners.

In a white paper, they argue that the Case-Shiller methodology -- which mixes distressed and non-distressed home sales -- has overstated price declines in most areas. They also say that as foreclosure sales have increased, the discounts associated with foreclosure prices, historically about 22% below normal market sales, have increased to 25% to 50% in many markets.

The Collateral Intelligence (www.co-intel.com) executives say that because of the widening foreclosure discounts, distressed sales should be examined separately from non-distressed sales when evaluating market conditions and likely future movements in home values.

The Case-Shiller index was created by economists Robert Shiller and Karl Case. The two men could not be reached for comment.

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