Everyone knows that all real estate is local.

One neighborhood may be hot while another one chills, and your home may be in-between. But that fact doesn't answer the eternal real estate question: What's my house worth?

The truth is that no one knows for sure unless they actually put their home on the market and find a buyer, a daunting task in our current summer doldrums. Another way is to have a professional appraisal performed.

But a less expensive alternative exists, and it has become America's pastime  -  watching the various Home Price Indexes as they hit the headlines.

The Office of Federal Housing Enterprise Oversight (OFHEO), which produces the highly regarded Home Price Index, recently released its figures for the twelve months ending March 31, 2008. And the numbers tell a shocking story.

In contrast to the screaming declines in value predicted by Robert Schiller of the S&P/Case-Schiller index, these figures showed that the average home value in America has not moved up or down in the past year.

The study also showed that the average home in the Atlanta metro area increased in value by 1.37 percent, and that the average home in Georgia increased in value by 2.2 percent.

Lest you think to yourself that this index must be somehow flawed and that surely the mainstreams media's wide reporting of the S&P/Case-Schiller Index must be more reflective of the truth, know this:

OFHEO's House Price Index tracks average house price changes in repeat sales and refinancings of the same single-family properties. The purchase-only index is based on more than five million repeat sales transactions, while the all-transactions index includes more than 35 million repeat transactions. Both indexes are based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over the past 34 years.

Every quarter, I look through their report for the "all-transactions" index change over the previous twelve months. In my opinion, that is the most important number on which we should focus.

The numbers often jump around quarter to quarter, but tend to average out over the period of a year and give a truer picture of what is really happening.

In dramatic contrast, the S&P/Case-Schiller Index over the same twelve month period showed a record decline in home prices in its US National Home Price Index of -14.1 percent. That's the number that made headlines nationwide, and that's the number that sent chills down my spine.

So what is the difference between the two indexes, and which one better reflects the true value of your home?

To answer the first question, here are some of the major differences in the way they collect data, as described in an OFHEO analysis:

* The S&P/Case-Shiller indexes only use purchase prices in their
calculations, while the OFHEO all-transactions index also includes refinance appraisals. The all-transactions index includes a much broader sample of repeat transactions, and I believe it better reflects the value of homes in a neighborhood.

* OFHEO's data comes from conforming, conventional mortgages provided by Fannie Mae and Freddie Mac. The S&P/Case-Shiller indexes use information obtained from county tax assessor offices in counties and states where that information is available. This is an important difference, because many low-income home sales and most high-end home sales are not included in the OFHEO statistics.

In my experience, the sales or refinancings of homes that fall in the middle of the market (loans of $100K to $417K) are most reflective of the average home price movement. In contrast, high end homes sales (loans over $417,000 in Atlanta) tend to contract in hard times and are more volatile than middle class values, and low-income home sales tend to be more a function of the financing program offered with them.

* The S&P/Case-Shiller indexes are value-weighted, meaning that price trends for more expensive homes have greater influence on estimated price changes than other homes. OFHEO's index weights price trends equally for all properties. As stated, I disagree with the value-weighting premise.

* The geographic coverage of the indexes differs. The S&P/Case-Shiller National Home Price Index, for example, has no value data from 13 states and limited data from others. OFHEO's U.S. index is calculated using data from all states.

The truth is that these two indexes are designed to measure different
things, but we consumers only ask one question: what is my house worth today?

Furthermore, you always run into trouble when you apply an average to every instance.

Even though the OFHEO index shows that the average home in Georgia increased in value by 2.2 percent, there is no guarantee that your home went up at all. In fact, it is entirely possible that your home and your neighborhood has had an entirely different experience over that same period.

And that gets us back to the original question of "what's it worth?"

The bottom line here is that you can read what you want and you can believe what you want. But in the end, your home is only worth what someone is willing to pay for it on the open market.

I am convinced that the numbers put out by the OFHEO are most reflective of actual changes in the overall real estate market, but your home may prove the exception to the rule.  Who you believe is up to you.

If you want to immerse yourself in more real estate sampling data than you might believe could exist, you are welcome to visit my website at money99.com and download the entire OFHEO Home Price Index report, all 82 pages of it, for free.