Case’s career rewarding by any measure
Pioneer housing economist retires
WELLESLEY - The idea for the most influential measure of the nation’s housing market began in Karl E. Case’s living room about 25 years ago. The Wellesley College economics professor was stunned to realize he had earned more in equity in his three-bedroom home than he made teaching during the same period.
He grew obsessed with housing values and wanted to come up with a better way to measure them. Within a few years, Case and his colleague Robert J. Shiller of Yale University created what is now called the S&P/Case-Shiller Home Prices Indices, a measure based on repeat home sales that industry officials and economists rely on to gauge the health of the country’s housing market.
Case spun his ideas on home values into a series of papers, became one of the nation’s foremost specialists on housing, and imparted his passion to students, leading them on tours of Boston neighborhoods and requiring them to go through the process of buying a house as part of their course work.
Now the 63-year-old professor, suffering from Parkinson’s disease, has decided to retire, his last class scheduled for today. Case said his brain and body are not functioning the way they used to. He is slowly losing his short-term memory and can no longer remember the names of all his current students. That might be a minor irritation to many teachers, but to Case it constitutes a crisis. He has taught, mentored, and befriended about 5,000 students, even presiding at weddings for two of them.
“I can remember the names of every kid from 25 years ago,’’ Case said. “All of a sudden I have a class now, and I don’t remember their names.’’
Following a Wellesley tradition, colleagues today will honor Case in his classroom as he teaches for the final time. Fellow professors, students, and alumni say he is unique, citing his enthusiastic recruitment of college athletes, his constant push to help graduates, and his love of loud country music.
“He’s an awesome force to have on your side,’’ said Ann Velenchik, an associate professor of economics who has known Case for 20 years. “I’m really sad for us.’’
Phillip Levine, chair of the college’s department of economics, said Case’s decision to retire was a surprise and a huge loss for the college.
“His energy and enthusiasm and the work that he has done are second to none,’’ Levine said. “It’s contagious when he starts talking about economics.’’
Case was hired at Wellesley in 1976 to specialize in urban and public finance. That same year, he bought his first house for $56,500 after a conversation with then Harvard University economist Gregory Ingram, now president of the Lincoln Institute of Land Policy. Case said Ingram told him, “The only thing dumber than not owning a house is not owning two.’’
Indeed, the housing market took off. Case’s Wellesley home jumped in value by 40 percent in one year; he sold it in 1991 for $228,500 and was able to put down $200,000 on the four-bedroom home he now owns, a warm and spacious house that has swelled in value to more than $1 million. Between 1984 and 1987, owners of single-family homes in the Boston area saw an increase in housing equity of about $100 billion, he said.
“Housing just went crazy. If someone just found $100 billion, it would be fairly big news,’’ Case said. “I needed to explain it. I spent the next 30 years trying to figure it out.’’
In 1986, Case published his first article criticizing the standard of measuring housing prices based on median sales prices. He argued that median prices showed only the values of homes that were selling at a specific time. Measuring the difference between repeat sales of specific homes, he said, is a more accurate way to judge housing appreciation. He also warned about a housing bubble at that time, a year before prices began to drop in 1987.
Case contacted Shiller, a Yale economist who also was writing about bubbles at the time. (Shiller remembers that he was the one to contact Case.) The two met and eventually perfected their statistical model for measuring values. They founded a company to maintain the index with former Yale student Allan Weiss in 1991, hiring a staff to crunch data, and in 2002 they sold it to
Standard and Poor’s began using the data in 2006 to facilitate trading on the Chicago Mercantile Exchange based on the ups and downs of the housing market. As the national market began to plummet, Case and Shiller’s monthly data became a staple for newspapers, radio, and television nationwide.
Case is pleased that the index has been helpful. But he said it has been painful to watch the damage caused by the current downturn. He said he and Shiller warned about a new bubble - when expectations drive prices beyond what income and population growth would predict - as early as 2003. He only wishes he yelled louder.
“Who would have thunk you could take a little housing market, and all of a sudden it is causing the whole world to shake,’’ Case said. “People have been hurt very badly.’’
Case said he is going to keep talking about housing, even in retirement, and will work on the 10th edition of his textbook, “Principles of Economics.’’ He also plans to continue speaking at conferences.
There will be plenty of time for former students, too. Spend a few hours with Case, and it is clear his students are always on his mind. He talks about them at length. In less than two hours on a recent day, he received two calls seeking his advice: one from a former student needing help in a job search, another from one wanting to know how her uncle should invest his money.
“I’ve got these 5,000 friends out there,’’ Case said. “I’m going to take care of the things I’ve got.’’
Jenifer B. McKim can be reached at email@example.com