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A blog reader emailed me asking why the press says that the number of solds are down but the median home price is up.

I don’t report median home price on my monthly mls statistics because I think it’s misleading. One month could have more higher-end homes selling which doesn’t mean that home values are increasing. On my statisitc pages, I break down the sales by price range in a city which is a better thermometer on the market trends. As a homeowner, the statistics I’m most interested in is what is happening for home types in similar neighborhoods (comparables!).

A few years ago, we had a few million dollar + homes. Now we have those homes that were sold for around a million going for multiple million. Since finding comparables is tough with higher-end homes, the value is truely what a Buyer will pay. When we have some oceanfront homes selling for $3 Million+ in a particular month, it’s going to affect the median home price for the region.

Markets like the Bay Area and Southern California have thousands of sold homes that are used to calculate the median home price. On the Central Coast, the slowdown in the market has dropped us to around 250 homes. A median home price calculation with that few of homes isn’t as strong of an indicator as in larger markets (or as it once was on the Central Coast when there were 800 homes a month selling).

Written by Keith Byrd - Go to Keith's Website/Profile