Median home prices seems to be what a lot of people look at to see what’s going on in a particular market. For those cities that have a lot like homes and a quantity of sales that can be a good data sample, tracking median home prices does tell a story. But here on the Central Coast, most cities have a wide variety of homes where how many higher-end homes selling (or not selling) in a particular month may really impact the median home price, especially for the cities that really don’t have a large number of sales these days.
Today’s Tribune is a good example of how one interprets monthly median home prices and other market data to try to tell a story. On the front page, the headline was “Local housing hit by a host of bad news” with the byline “Buyers eye foreclosures, leaving newly built home sales in June and median home prices in decline”. The article then talks about new homes in SLO County dropping 67% as compared to June 2007. Since the Trib didn’t provide what happened in previous months we really don’t know if the June-to-June comparison is that meaningful since June 07 could have had a “blip” of above average sales for that month or June 08 may have had a slower month than previous months.
The other piece missing from the Tribune article is the new home data. How many new homes were sold in June in SLO County?? In the 4th paragraph, they do mention that 240 new and existing home sales occurred. I ran June sold numbers in the MLS and found 219 Solds in June, with 12 of those being new construction. So, that says that 33 of June’s sales were new homes or 13.75% of total sales (most new sales don’t go through the MLS). That seems like a small percentage of total sales to focus the story around but I guess the 67% decline figure was a better attention grabber.
The article then went on to talk about foreclosures which the article even stated was 16% of June’s sales compared with 42% for the State average. According to the data I track, foreclosures in SLO County have been around 28% so the 16% would be a significant drop in foreclosure sold percentage to total home sales but the article fails to mention anything about trends, nor even discuss why SLO County is so much lower than the state average.
My last criticism on the Tribune article is about the graph they included to go along with the story that shows an INCREASE in median home prices over last month. Seems that sends a different message than the article it is meant to complement. You can see the graph here or read the full Trib article here
But the Tribune isn’t alone in using monthly median home price data in a story. The Wall Street Journal just posted an article using median home price info from the Calif Association of Realtors. This is a story on what the graph the Trib printed shows. They report that “Statewide, the 10 cities with the greatest median home price increases in June 2008 compared with the same period a year ago were: Manhattan Beach, 49.4 percent; Cupertino, 33.3 percent; San Luis Obispo, 11.4 percent; Los Gatos, 3 percent; San Carlos, 1.5 percent; Sunnyvale, 1.4 percent; Ridgecrest, 1.4 percent; Campbell, 1.3 percent; Temple City, 0.9 percent; San Rafael, 0.8 percent.” Read the entire article here Are readers supposed to think that SLO County market has hit bottom and now on its way back up??
I try to provide multiple data points to try to show what is going on in the market. For median home prices, I calculate them on a quarterly and 6-month data sample to try to see trends as I know monthly median home price calculations fluctuate so much. Also, tracking inventory, number of price changes per month, foreclosure percentages, mortgage rates, etc. are all data that I would use to try to understand what’s going on out there.
I did just calculate median home prices for the first half of 2008 and have updated the median home price page on http://www.slowatch.com/. Below is a comparison summary with first half of 2007. To me, this provides a better gauge on what the market has done in the past year. What I’m really looking for is the indicators that the market has hit bottom and that won’t come from only looking at median home price comparison data from a year ago.
Median Home Prices (First Half 2007 vs. First Half 2008)
|Arroyo Grande Homes||-16.67%|
|Grover Beach Homes||-9.05%|
|Los Osos Homes||-4.22%|
|Morro Bay Homes||-7.42%|
|Paso Robles Homes||-20.00%|
|Pismo Beach Homes||-3.60%|
|San Luis Obispo Homes||-2.34%|
|Santa Maria Homes||-33.33%|