I thought the median was a useless statistic? It seems that people on this forum like to knock the median when it’s going up (myself included) but then take it at face value when it’s going down. I’m not singling anyone out here, just trying to illustrate a point.
Instead, does anyone have access to median price/sq ft data? I believe this was one of the statistics that was used when the median was going up, in order to debunk it. i.e. balance of houses sold was trending towards larger houses, so the price was going up, but price/sq ft was actually declining.
I’m not arguing that prices are going down – it’s pretty apparent that they are. I do, however, think that we need to be careful regarding picking and choosing statistics that best fit in with our beliefs.
I’ve mentioned this a few times before, but it’s interesting to note that the YOY figure will continue to decline until November 2006 EVEN IF PRICES LEVEL OFF TODAY. Since the YOY figure is the one that people pay attention to (in the media anyway), it’s going to *seem* to get worse, even if it actually doesn’t. This, ironically, might feed the cycle to make it worse, even if it wasn’t going to get worse. (I think my head is about to explode)
The median is not useless, but it has its flaws, just like the CPI has serious flaws.
The median is a 1-2 year lagging indicator. What they are saying, I think, is that the median’s downtrend is significant in that it will be reported widely in the news. Americans will finally understand and believe that home prices are falling. This realization ought to change buyer psychology even more, slowing down sales! Sellers will start lowering prices. Yes, the median is widely followed, so its numbers, for better or worse, impact the psychology of the market.
carlislematthew, you have a good point. I think the median is relevant because that’s that is published in the press and that’s way the average buyer/seller looks at when making a transaction decision.
Until the median (which is the most widely use stats) shows a significant decline, the public will still think that real estate is stable and thus a good buy.
I think Carlisle is trying to put some subliminal advertising in his posts, because my neighbor’s house is for sale and I saw him lower the price by $5K just while I was sitting here.
Did you say something about it getting worse even when it wasn’t getting worse, technically? Is that like the process where you keep getting drunker after you’ve stopped drinking? Darkest before the dawn? And so forth?
Did you say something about it getting worse even when it wasn’t getting worse, technically? Is that like the process where you keep getting drunker after you’ve stopped drinking? Darkest before the dawn? And so forth?
Absolutely! The excess inventory and lack of affordability is similar to the last two gin and tonics in my stomach. I’m already drunk, but have yet to feel the effects of the freshly imbibed toxins.
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