Comments on: San Diego Home Sales Figures – Not All That They Seem

By: mtech

mtech — Tue, 10 Nov 2009 21:41:29 +0000

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By: sd_watcher

sd_watcher — Mon, 13 Aug 2007 16:17:54 +0000

Here are a couple of factors that you don’t hear discussed in regard to the supposed continued appreciation in the high end markets:

1) This category of homes has a much greater percentage of “tear-down” remodels and extensive remodels in general. Hence, the median home being sold each year is a moving target. Appreciation should be a measure of the increased value of the same item — not a “new and improved” one.

2) The percentage of homes in this category that are second/vacation homes is higher than in less expensive markets. I suspect that many of the most expensive homes in this category fall into this category (versus the typical 3BR/2BA ranch style.) One would expect that second/vacation homes are more liquid than primary residences. The supposed continued appreciation at the higher end could in fact be an increased turn-over of these second/vacation homes even if they are selling at a *reduced* price. I.e.:

Year 1: sales
1,100,000
1,300,000
1,500,000
1,700,000

By: Vadim

Vadim — Sun, 06 Aug 2006 21:15:03 +0000

Hi Bob, love your site. Your observation is right on — median sales prices do not necessarily reflect the health of the market. For example, if the market ground to a complete stop, except for $10,000,000 homes, then the median sales price would go up to $10,000,000.

On the other hand, the average (mean) sales price is not a better indicator; in fact, it’s worse (under your assumption that the high-end houses are their own market). Here are two scenarios, each with five home sales:
10,000,000
500,000
500,000
500,000
500,000
MEDIAN=500,000 MEAN=2,400,000

10,000,000
450,000
450,000
450,000
450,000
MEDIAN=450,000 MEAN=2,360,000

The median shows a 10% decline, while the mean shows not even a 2% decline.

By: Dr. Larry

Dr. Larry — Tue, 01 Aug 2006 18:20:17 +0000

Just heard that the California Association of Realtors is now no longer saying California real estate market will have a ’soft landing’.

Larry

By: Dr. Larry

Dr. Larry — Fri, 28 Jul 2006 19:27:32 +0000

Your points are well taken. With a number og homes ’sitting’ on the Mkt. for months now, your article really is on the mark!

By: Los Angeles attorney

Los Angeles attorney — Fri, 28 Jul 2006 19:20:58 +0000

Right on insights!