The secret behind median price increases
For anyone who has been watching median prices locally and across the country going up while inventory climbs, and sales drop - and wondering WTF is going on, I offer the following
From Altos Research, here is the trend of median prices for Seattle
And from the same source here is the trend of price per square foot...
As you can see, as the median price is rising, the cost per square foot is generally dropping - faster than the rise in the median price
By my understanding of math - what this means is that the average size of home sold in the past few months has to be going up - considerably! So yes, median prices are going up - but it appears that buyers are gettin "more" for their money in terms of square footage.
And I would also assert that larger houses tend to be nicer on average - so I would suspect that generally the quality of homes that has been sold is better as well.
Neither of these trends is reflected in the reported median price
D
From Altos Research, here is the trend of median prices for Seattle
And from the same source here is the trend of price per square foot...
As you can see, as the median price is rising, the cost per square foot is generally dropping - faster than the rise in the median price
By my understanding of math - what this means is that the average size of home sold in the past few months has to be going up - considerably! So yes, median prices are going up - but it appears that buyers are gettin "more" for their money in terms of square footage.
And I would also assert that larger houses tend to be nicer on average - so I would suspect that generally the quality of homes that has been sold is better as well.
Neither of these trends is reflected in the reported median price
D
Comments
As corroborated by other data sources (and personal acquaintances of mine), nothing is moving at the low end, most especially condo sales are slowing.
Isn't this reminiscent of some other pattern we've read about before?
Hi B....
Actually, that's not true. MLS shows Pending condo sales were the same in March 2007 as March 2006...and closed Condo sales were up 6% YOY.
http://www.nwmls.com/discover/library/s ... akouts.pdf
"People have been building bigger homes—the typical new home is about twenty-five per cent bigger than it was twenty years ago—and putting money into improvements like central air-conditioning, home theatres, and pools. And the impact of quality adjustments isn't trivial; a study of home prices between 1977 and 2003 found that adjusting for quality reduced the return to homeowners by forty per cent."
http://www.newyorker.com/archive/2006/1 ... surowiecki