Good analogy! If you try to apply pure economic and financial concepts to understand home prices….you never will. This is a good site with one major fundamental flaw. Rich says “In God We Trust. Everyone Else Bring Data”. The data sucks! There is no such thing as good data in home sales because there is no consistency in reporting or data collection. We are also comparing a constantly changing asset. One of the major reasons the median has been rising the last two years is that larger/newer homes are now in the mix of resales. There was very little building between 1985 and 1997. Since 1997 there has been a building boom of newer larger homes. What we are seeing in the stats is different (i.e. more newer and larger)homes selling not increasing prices. make no mistake about. Home prices peaked in April/May of 2004. The data also includes top producing high volume agents refreshing their listings every 45 to 60 days. Average market times if you add the previous failed listings are probably closer to 80 days not the 55 to 60 days you see quoted. These are just a few of the many problems with the data.
