I think PS actually makes an excellent point. That said, Rich would certainly acknoweldge this, and doesn’t point to median/Sq ft as the be all and end all-just that’s it’s more accurate than the median.
A few months ago I ran a regression on all the houses for sale in Rancho bernardo. It confirmed what I alredy suspected, but was interesting to see it quantified: Bedrooms are more important than square footage, and the average $/sq. ft. is much higher than the marginal $/sq. ft.
Said differently, and everyone knows this just from experience, the value of a square foot getting a house from 1,200 to 1,500 square feet is much, much higher than the the value of getting it from 2,200 to 2,500.
So, PS brings up an excellent point-as the distribution skews toward the high end, this will tend to bring down the $/sq. foot. What we really need is to rely on Case Shiller data (which is more in line with the $/Sq. foot), or to look at the median price within square foot size bands.
Finally, I haven’t heard this mentioned lately-lots of houses now have granite countertop and pergo floors rather than the ratty carpet and 80s tile of a few years ago. On top of that, there is alot of cash back going on. I think it’s fair to assume that the “housing stock” quality now is higher than it was 5 years ago. Another reason why the statistics are misleading. This alone could be worth 5ppts of depreciation between 2001 numbers and now.
I would love to hear Rich’s response, but PS doesn’t have to be a narcissistic ass to start some dialogue.
