You are right, Stan, when I run it only for homes priced at less than $600k, the correlation is a lot higher (r-squared = 43% for all San Diego county). But since I’m charting the pr/sqft for all houses, and there is no correlation for the dataset as a whole, I don’t think this particular issue presents any big distortions. (At least, any distortions from this issue are probably minor in comparison to some of the other distortions caused by the fact that square footage is an extremely rough proxy for overall quality — a square foot in La Jolla is different than a square foot in La Mesa, and all that.)
This is false. I just took the August single family home resale data and measured the r-squared between home size and home price per square foot. The r-squared was .008, meaning that there is effectively no correlation whatsoever between home size and price per square foot. I’ve done this previously as well, for both sfh’s and condos, and come up with a similar result.
In regard to the rest of her post: I have frequently written about the shortcomings of the various home price measures, including a long article at voiceofsandiego.org and ongoing disclaimers when I discuss the data. These measures are all imperfect in different ways, but they can provide useful information when analyzed in the context of their potential flaws — as I have constantly pointed out. I’m really not sure how to make these concepts any more clear.
As always, thanks to everyone for their support.
Rich
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