Buyers Getting More House for Their Money Even as Median Prices Rise

In our conversation last week about median prices, David Losh brought up an interesting question:

It would be interesting to see what the median price buys you this year compared to last year, or the year before.

With some neighborhoods around Seattle showing year-over-year gains in their median prices, it would be informative to see just what kind of houses people are buying at the median price compared to a year ago.

Since I don’t have full access to a database with all the details for every home sold over the last few years, this exercise will be anecdotal, but I still think it will interesting.

For this post, we will examine the King County NWMLS areas listed in the following table. The single-family home (SFH) median prices listed below are an average of December through February in order to smooth out the noise that results from such small sample sizes.

Click the description of an area to jump to that area in the post below.

Area # Description Feb.09 Med. Feb.10 Med. YOY
705 Ballard, Greenlake, Greenwood $407,500 $400,350 -1.8%
710 U District, Wedgewood, Lake City $446,563 $442,333 -0.9%
390 Capitol Hill, Madison Park $503,500 $531,083 +5.5%
540 East of Lake Sammamish $544,333 $509,225 -6.4%
560 Kirkland, Bridle Trails, Rose Hill $665,528* $540,779* -18.7%

*6-month rolling average

In my anecdotal analysis of thirty SFH sales scattered around King County, I found that even in areas where the median prices are flat or going up, buyers seem to be getting more home for their money. The 2010 benefit ranged from 3% larger homes (for 19% less money) in Kirkland to a whopping 65% more square footage for roughly the same price as 2009 in the Greenlake area.

Below you will find the full sampling of three SFH sales in each of the above areas from January/February 2009 and three from January/February 2010. I’ll be looking for closed sales that fall within ±5% of the above-listed 3-month average of the median.

Hit the jump for the detailed tables and analysis.

Ballard, Greenlake, Greenwood (705)

2009

Address Date Price Beds Baths SqFt Lot Size
8060 17th Ave NW 02/17/2009 $392,000 2 1 1,150 3,700
4673 1st Ave NE 02/11/2009 $388,000 2 1 1,150 2,940
6407 1st Ave NE 02/12/2009 $411,000 3 1 992 4,230

2010

Address Date Price Beds Baths SqFt Lot Size
657 NW 87th St 02/16/2010 $397,000 3 1.75 1,800 4,600
8247 Wallingford Ave N 02/11/2010 $399,500 3 1 1,910 4,455
5835 Woodlawn Ave N 02/16/2010 $410,000 4 1.75 1,750 3,000

In our sampling of the Ballard / Greenlake / Greenwood area, the average early 2009 buyer paid $397,000 for 2.3 bedrooms and 1 bathroom in 1,097 square feet on a 3,623 square foot lot. The average early 2010 buyer paid $402,167 for 3.3 bedrooms and 1.5 bathrooms in 1,820 square feet on a 4,018 square foot lot. In other words, the 2010 buyers got roughly 65% larger houses than the 2009 buyers for nearly the same price.

U District, Wedgewood, Lake City (710)

2009

Address Date Price Beds Baths SqFt Lot Size
8046 40th Ave NE 01/12/2009 $450,000 2 2 1,720 5,300
7748 20th Ave NE 2/20/2009 $450,000 3 1.75 2,150 5,116
1218 NE Ravenna Blvd 01/23/2009 $445,000 3 1 1,390 3,200

2010

Address Date Price Beds Baths SqFt Lot Size
7346 20th Ave NE 02/11/2010 $434,000 3 2 2,060 7,200
6842 38th Ave NE 02/12/2010 $440,000 4 2 2,040 4,510
5757 40th Ave NE 02/26/2010 $450,000 2 1.75 2,350 3,735

In our sampling of the U District / Wedgewood / Lake City area, the average early 2009 buyer paid $448,333 for 2.7 bedrooms and 1.6 bathrooms in 1,753 square feet on a 4,539 square foot lot. The average early 2010 buyer paid $441,333 for 3 bedrooms and 1.9 bathrooms in 2,150 square feet on a 5,148 square foot lot. In other words, the 2010 buyers got roughly 15% more house than the 2009 buyers for nearly the same price.

Capitol Hill, Madison Park (390)

2009

Note: I had to go a little bit outside the date and price range to find three sales for 390.

Address Date Price Beds Baths SqFt Lot Size
945 20th Ave 12/03/2008 $518,000 3 1.5 1,970 3,630
318 29th Ave E 12/15/2008 $525,000 3 1.5 2,230 4,800
2814 E Thomas St 02/12/2009 $475,000 3 1 2,060 3,440

2010

Address Date Price Beds Baths SqFt Lot Size
1222 24th Ave E 01/21/2010 $546,000 6 2.5 3,430 4,800
2015 25th Ave E 01/28/2010 $505,000 3 1.75 1,920 3,279
1900 E Denny Way 02/24/2010 $517,000 2 2 2,500 2,320

In our sampling of the Capitol Hill / Madison Park area, the average early 2009 buyer paid $506,000 for 3 bedrooms and 1.3 bathrooms in 2,087 square feet on a 3,957 square foot lot. The average early 2010 buyer paid $522,667 for 3.7 bedrooms and 2.1 bathrooms in 2,617 square feet on a 3,466 square foot lot. In other words, the 2010 buyers got roughly 30% more house (but about 10% less land) than the 2009 buyers for a slightly higher price (3.3%).

East of Lake Sammamish (540)

2009

Address Date Price Beds Baths SqFt Lot Size
1248 236th Pl NE 01/14/2009 $575,000 3 2.75 2,100 3,606
2439 222nd Ave NE 02/19/2009 $520,000 4 2.5 2,530 13,939
3122 Sahalee Dr W 02/19/2009 $540,000 4 2.5 2,430 12,197

2010

Address Date Price Beds Baths SqFt Lot Size
2418 236th Ave NE 01/15/2010 $503,000 4 2.5 2,410 8,688
1213 207 Pl NE 02/26/2010 $512,500 4 2.5 2,870 9,750
4308 201st Ave NE 01/15/2010 $519,470 4 2.75 2,370 8,254

In our sampling of the area east of Lake Sammamish, the average early 2009 buyer paid $545,000 for 3.7 bedrooms and 2.6 bathrooms in 2,353 square feet on a 9,914 square foot lot. The average early 2010 buyer paid $511,657 for 4 bedrooms and 2.6 bathrooms in 2,550 square feet on a 8,897 square foot lot. In other words, the 2010 buyers got roughly 8% bigger houses (on 10% less land) than the 2009 buyers for 6% lower prices.

Kirkland, Bridle Trails, Rose Hill (560)

2009

Address Date Price Beds Baths SqFt Lot Size
11228 NE 67th St 02/12/2009 $658,000 4 3.5 3,594 3,612
348 Slater St S 02/10/2009 $685,000 4 3.5 2,535 16,117
12316 NE 97 St 02/25/2009 $650,000 3 2.5 2,763 7,303

2010

Address Date Price Beds Baths SqFt Lot Size
7025 117th Pl NE 02/18/2010 $531,646 4 3.5 3,570 3,600
5920 114th Ave NE 01/27/2010 $540,000 4 2.75 3,060 10,212
4304 105th Ave NE 02/24/2010 $545,000 4 2.75 2,500 8,873

In our sampling of the Kirkland / Bridle Trails / Rose Hill area, the average early 2009 buyer paid $664,333 for 3.7 bedrooms and 3.2 bathrooms in 2,964 square feet on a 9,011 square foot lot. The average early 2010 buyer paid $538,882 for 4 bedrooms and 3 bathrooms in 3,043 square feet on a 7,562 square foot lot. In other words, the 2010 buyers on average paid roughly 19% less for slightly larger houses on slightly smaller lots.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

33 comments:

  1. 1
    Mikal says:

    Never mind. I need to improve my math.

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  2. 2
    The Tim says:

    By Mikal @ 1:

    How is 1800 square feet 65% larger than 1100 square feet?

    1,097 * 0.65 = 713
    1,097 + 713 = 1,810

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  3. 3
    Mikal says:

    RE: The Tim @ 2 – I figured it after posting. Thank you for the clarification.

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  4. 4
    deejayoh says:

    ooh. is this a new calculator feature?

    square root of 643

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  5. 5
    The Tim says:

    RE: deejayoh @ 4

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  6. 6
    Elizabeth says:

    I’d be interested in seeing what the 2009-size house would go for today.

    Rate this comment: Thumb up 0

  7. 7
    patient says:

    Very nice post. Median price is up but home values continue to decline. This is what the local real estate agencies will channel as bottom, price recovery and hurry before you are priced out foooorever through MSM. It’s a legimate scam to use the median as a measure of home prices. It will lead to another year of misguided sellers that will cling to unrealistic prices and volumes will stay relatively low. The re-industry is doing a nice job of starving themselves.

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  8. 8
    David Losh says:

    My point is that the houses are also in better shape. There’s more attention to the condition. Nicer properties are selling for less.

    patient is right that the median is a sales tool.

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  9. 9
    alex says:

    The Case-Shiller metric is immune to this “house feature inflation” phenomenon, though…

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  10. 10
    ARDELL says:

    Interesting comments. I never posted median prices until one of the consumer readers of RCG asked me to do that. When they asked for median price per square foot, I accommodated that request.

    I never use either in my business, but I find it somewhat informative to calculate them. They don’t tell the full story for sure, but they are an interesting part of the equation none-the-less.

    I would never, ever have done full King County stats, if I were not asked to do that, as I do not work in all of King County. I’m more likely to be in that part of Snohomish that borders North King County than South Seattle. or South King County.

    I only do King County stats because our readers seem to want it to compare that data with information they find here on Seattle Bubble. At least that was the case before we screwed up the format on RCG. Totally contrary to David’s comment that it is a “sales tool”, I only did those stats on a County-wide basis because readers asked me to do that. In fact I have been criticized when I only talk about the areas I am expert in, and don’t include full King County stats.

    Very interesting comments here, from my perspective.

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  11. 11
    The Tim says:

    RE: David Losh @ 8 – Yes, unfortunately there’s obviously no way to quantify that after the fact just looking at sales statistics.

    RE: alex @ 9 – Indeed. The idea behind this post was to sort of do a quick look Case-Shiller-ish analysis of some specific neighborhoods around the Seattle area. Since Case-Shiller lumps all of King, Snohomish, and Pierce together, there’s a lot of local detail that gets lost in there.

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  12. 12
    ARDELL says:

    Tim,

    This is an AWESOME post! I cannot interact with your conclusions or the post itself, but wanted to herald your basic post content!

    As agents and members of the mls, we are not allowed to post the listings of other agents in this specific manner. Nor are we permitted to enter into conversations about those listings. We are only allowed to talk about the properties we were personally involved in, which makes the idea self-serving and of no use to the public at large.

    I think it is incredibly awesome that you are doing this, and encourage specific delving into homes that have sold or are for sale by you, a consumer based blog…as no one who is a member of the mls is allowed to do what you can.

    Bravo! w00t!

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  13. 13
    David Losh says:

    Well….

    Kind of a great lead in.

    I agree that there should be a forum to talk about properties that are good properties that are over looked. It has happened consistently in the bubble market.

    A house would come on the market with an inexperienced agent, or discount brokerage, and sit there. Then the price reductions start, then the property goes off, and on the market until eventually it either gets a low offer, or goes off the market.

    People play a lot of games with real estate when it as simple as determining value. Some properties are great properties that get over looked.

    My online business model for Buying Seattle would like to be in that format. What I think is that it should be a positive format rather than bashing. That’s the only way I see a site getting broad support. An excellent value feature would be the theme.

    These would be properties that could be submitted, but I have the feeling every agent would submit, so the properties would have to be chosen then promoted gracefully.

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  14. 14
    ray pepper says:

    “David Losh brought up an interesting question”

    This alone is noteworthy!

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  15. 15
    Scotsman says:

    Wow- my best guess is there was a lot of beer/wine being consumed in the sun today.

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  16. 16
    Herman says:

    Tim, how do we know that you didn’t “select” your samples with a bias to prove your point?

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  17. 17

    I think you’re just seeing a change in mix. I did a search for 3-4 bedroom homes, 1.75+ bath between 85th to the north, 45th to the south, 8th to the west and I-5 to the east for Greenlake, with dates between 12/10/09 to 3/16/10 and 12/10/08 to 3/16/09 and found both the mean, median and average square footage had all dropped. The square footage and mean were both roughly 10% less and the median down just slightly more than 10%. That’s significantly different than the numbers you came up with for Greenlake. Part of the difference could also be different area definitions, but I would suspect a lot of it is just going for any property within a given area, as opposed to a specific type of property.

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  18. 18
    The Tim says:

    By Herman @ 16:

    Tim, how do we know that you didn’t “select” your samples with a bias to prove your point?

    Well I just pulled all the homes from a search of solds on Redfin, something anyone could do for themselves if they want. Other than that, you don’t have any way to know, I suppose. Just my word that I did what was described in the post: pull sales that were as close to the posted (3-month average of the) median for that area. In most of the areas there were only 3-5 sales to even choose from, and I picked the ones closest to the median in the given time period.

    By Kary L. Krismer @ 17:

    Part of the difference could also be different area definitions, but I would suspect a lot of it is just going for any property within a given area, as opposed to a specific type of property.

    As I just reiterated to Herman, I wasn’t just “going for any property,” I was looking for properties that sold during the given time periods at prices as close as possible to the median. The performance of higher end homes and lower end homes may be different from the median-priced homes, but the purpose of this post was to examine how much home people are getting for their money in 2010 vs. 2009 when they buy near the median in different areas.

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  19. 19
    anonymous says:

    I can think of two things. One is the collapse of the condo market – people finally realized that a tiny, poorly constructed, glorified apartment in a bad neighborhood isn’t automatically worth $350K, and association dues that don’t cover the full cost of maintaining the property won’t last.

    The other is related to the “equity ladder”. I personally know a lot of people who bought a tiny piece of junk they didn’t like because it was all they could afford and they figured they would only have to live there a couple years before they could sell for a profit and move up. Now I suspect a lot fewer people would by a place (owner occupied) where they didn’t want to live just to be in on the ownership game. An “entry level” house would have to be a place you could see yourself living in for 5-10 years to be even remotely acceptable now.

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  20. 20
    HappyRenter says:

    By anonymous @ 19:

    I can think of two things. One is the collapse of the condo market – people finally realized that a tiny, poorly constructed, glorified apartment in a bad neighborhood isn’t automatically worth $350K, and association dues that don’t cover the full cost of maintaining the property won’t last.

    On the other hand, a lot of people these days prefer living in a condo so that you don’t have to take care of a yard or general repairs which need to be done in a single family home. On the other hand, I have heard of a lot of condo owners who are fed up with the constant money requiring projects which need to be done around the condo complex.

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  21. 21

    RE: David Losh @ 8

    Good Point David

    And how much money was poured into the money pits to get them looking like new?

    Sounds like a huge loss for sellers at flat table prices, let alone -YOY%.

    But all sellers are building contractors, skilled carpenters and landscape artists rolled in one; it won’t cost ‘em a dime to upgrade to sell as high as possible…..Home Depot hands out the materials needed for pennies on the dollar….LOL

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  22. 22
    Scott is Rad says:

    By HappyRenter @ 20:

    By anonymous @ 19:
    I can think of two things. One is the collapse of the condo market – people finally realized that a tiny, poorly constructed, glorified apartment in a bad neighborhood isn’t automatically worth $350K, and association dues that don’t cover the full cost of maintaining the property won’t last.

    On the other hand, a lot of people these days prefer living in a condo so that you don’t have to take care of a yard or general repairs which need to be done in a single family home. On the other hand, I have heard of a lot of condo owners who are fed up with the constant money requiring projects which need to be done around the condo complex.

    The arguments here sound like great reasons for renting an apartment. But then again, personally, I’ve never understood the idea of buying a condo. They seem to get hardest anytime there’s a problem in the market.

    Where prices are trending, they’ll be giving them away two at a time when you sign up for a new savings account at your local bank.

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  23. 23

    RE: The Tim @ 18 – I can see now why you called your exercise “anecdotal.”

    Interesting that in your Greenlake sample it was one bathrooms in the results. I don’t have the search area up that I used, but for the 1.75+ bath the sales volume was roughly the same, maybe off 3-5 units or something. I wonder if the 1.5- bath sales were way off? If I get time, I’ll check.

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  24. 24
    HappyRenter says:

    By Scott is Rad @ 22:

    The arguments here sound like great reasons for renting an apartment. But then again, personally, I’ve never understood the idea of buying a condo. They seem to get hardest anytime there’s a problem in the market.

    Buying a condo makes sense only if after 10 years your monthly payments (mortgage+HOD) are lower than what you would pay in rent for the same apartment. For example: some family friends bought a 2-bedroom condo in Switzerland 10 years ago for 500’000 SFr. Today, they are paying in total 1300 SFr a month for mortgage+HOD (interest rates in Switzerland are very very low: 3-3.5%). A similar apartment in the same area would rent today for 2000-2500 SFr. For them it made totally sense to buy. I’m not sure I can apply the same reasoning in Seattle where wages are much lower and interest rates much higher.

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  25. 25
    anonymous says:

    By HappyRenter @ 24:

    By Scott is Rad @ 22:
    The arguments here sound like great reasons for renting an apartment. But then again, personally, I’ve never understood the idea of buying a condo. They seem to get hardest anytime there’s a problem in the market.

    Buying a condo makes sense only if after 10 years your monthly payments (mortgage+HOD) are lower than what you would pay in rent for the same apartment. For example: some family friends bought a 2-bedroom condo in Switzerland 10 years ago for 500’000 SFr. Today, they are paying in total 1300 SFr a month for mortgage+HOD (interest rates in Switzerland are very very low: 3-3.5%). </

    It also only makes sense in that scenario if you are going to live in the condo for over 10 years. I would guess much fewer than 50% of the people who bought condos in Seattle in the last few years stay for 10 years or more, or at least they won't want to.

    But my point was that since sensible people now would only buy a home to live in that they would want stay in for the long term. You knock cruddy "starter" homes off the list (they would need to be fixed up, way cheaper, or rented) and the median house should be nicer.
    Also, I have no problem with people preferring condos (for many of the same reasons others rent), but I do believe the market has collapsed, putting them farther below the median.

    I'm not gonna run the math on 500K SFr at 3-3.5% plus HOA being under 1300/mo, but it sure seems low.

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  26. 26
    anonymous says:

    RE: @ – OK, I did run the math. They would have needed to put around 150K down on a 40 year loan at 3% with only 47/mo in HOA.

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  27. 27
    HappyRenter says:

    By anonymous @ 26:

    RE: @ – OK, I did run the math. They would have needed to put around 150K down on a 40 year loan at 3% with only 47/mo in HOA.

    They might have put down even 200K. You can’t lock interest rates in Switzerland (only for a maximum of 3-5 years), but it’s still considered safe because Swiss interest rates do not oscillate a lot. Right now interest rates are at around 2.5% (exceptionally low because the SNB keeps interests low like the Fed in the US). The Swiss never pay off their mortgage because property taxes are very high and deducting the interest rates balances out the property taxes. So, I don’t know how they calculate the monthly mortgage payments based on a specific loan. Right now, there are discussions in Switzerland about abolishing property taxes, but I have no idea how far that will go.

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  28. 28

    The homeownership rate in the U.S. is nearly 69 percent — indicating that homeownership is within reach for more Americans than ever before. In fact, it can be as affordable as renting, and in some regions of the United States, it can be more affordable. The following are some of the advantages of owning a home rather than renting. You can build equity; this means your wealth will increase as you gain more home equity. You can gain tax advantages, because mortgage interest is tax deductable. A home provides a permanent place where your family can live and grow, and you can decorate or expand a house the way you like to create your dream home. [Blatant advertisement removed by The Tim per the comment policy.]

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  29. 29
    ARDELL says:

    One of the reasons you buy vs rent is so that you can do whatever you golly please, pretty much, without answering to a landlord. In many ways buying a condo is almost like answering to 100 landlords, your neighbors and the HOA, who all want to tell you what you can and cannot do in and around your “home”.

    The bundle of rights, the right of “quiet enjoyment” and others, should be weighed against the cost. Are you getting the full “bundle of rights” that comes with buying vs renting? Read the minutes carefully. Are there notable neighbors who come to the Board Meetings month after month to control what their neighbors are doing? Ask for a list of who was fined and for what in the last year. All too often, people stop at that new granite countertop.

    Then again, buying a condo can be perfect for someone who aspires to be “President” of something. Becoming the President of your HOA Board, is not all that difficult. I once saw a guy get all the votes in his condo complex, in exchange for free oil changes :)

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  30. 30

    Becoming a even a member of a condo board can be difficult if you’re a nutcase. At my old condo there was one guy who tried repeatedly to become a member of the board, but only he and his five crazy friends ever voted for him. Much more than that was needed in a 100+ unit complex.

    And don’t assume that living in a condo will be less work. You might have to join the board just to protect your interests. I joined after discovering that the board almost perfectly forecast both expenses and revenues, but didn’t have the guts to raise dues (set low by the developer) until the point where a special assessment was needed.

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  31. 31
    David Losh says:

    When you buy into a condo property you need to be a part of the process of maintaining the building. Then you also need to consider the special assessment possibilities. You are buying a package, and set of reserve funds in the event something goes wrong. In new construction many things can go wrong.

    First you would need a condo expert who knows the market place, rather than the site sitter. The Real Estate market place is fueled by gossip, so you need inside information.

    Second will be the management of the building. If it is self managed you will want to meet the president and follow the “politics” of the building. If there is a management company you want to be sure they are involved.

    I’m going to plug http://www.primeseattle.com/ as the best condo management company that we’ve run across. Other companies are there to maximize the profits of managing a property. You need some one who can negotiate a balance with the home owners and what needs to be done.

    A condo is more than the unit. It’s a life style.

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  32. 32
    SummitSeeker says:

    RE: alex @ 9
    Hey Tim, any chance you can post a monthly graph of price per square foot sold in the prior month, for each of the three case shiller price tiers? Rich at piggington.com has been doing this for over a year. It’s proven to be a pretty accurate method for forecasting the case shiller index, which doesn’t come out until after a 3 month lag. Here’s an example of the latest:
    http://piggington.com/february_2010_resale_data_rodeo
    A lot of people think we are at a turning point in the market, with the possible beginning of a new leg down. I would think that anything that can provide some forecasting value would be of interest to your readers.

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  33. 33
    The Tim says:

    RE: SummitSeeker @ 32 – I will see what I can do about obtaining that level of detail in the data. The typical sources I get my data from do not provide any square footage information, but there may be a few places I can look.

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