Tomorrow’s voiceofsandiego.org column, a link to which will be available on the upper right of the page*, concerns the shortcomings of the median price as a gauge of broad pricing power.

The executive summary is that the median price does a good job of measuring how much people are willing to spend on housing, but there is a margin of error in translating that to changes in the market price of a given property. Depending on the dynamics involved, this error can go either way: the median price overstated price growth until 2003, after which time it began to understate actual price growth. As has been discussed in the forums, we seem to be getting back to a situation where median prices are once again overstating housing market pricing power.

The best way to measure pricing power, of course, is by tracking multiple sales of the same unit. For a long time I intended to start looking for data on homes that had been sold twice recently, or at least homes that had been sold once recently and were currently selling again. Unfortunately I never got around to it, but there is good news: a longtime piggington.com reader has stepped into the void and started his own website tracking just this sort of thing.

The website is located at http://sandiegomarketmonitor.blogspot.com, and it uses data from the MLS and the county recorder’s office to find properties that are now listed for sale at prices lower than their previous sale price. Content from this site is aggregated in my "other bubble bloggers" section at the bottom right of the home page, but I wanted to specifically point this site out because, given the shortcomings of the median, I think it will be a valuable resource as the downturn unfolds.

* – The reason for this separation from regular content is twofold:

1. because I want to distinguish the real content from the "stubs" that just link to the voiceofsandiego.org columns
2. the scope of those columns will be expanding beyond just housing, and since this is a housing-related site, I feel it’s better to keep the front-and-center content on topic