The median price is the mid-point of all sales transactions for a particular month. The median price reflects what people spend.
Take your scenario, when home prices drop, you still plan to spend the same amount of money (getting a bigger house). You did not plan to spend less. Your behavior is very typical of middle class folks.
This is why the median price does not reflect the market price. This is why it can go up while the “real home price” is going down.
I agree with deadzone about waiting until end of 2008.
