You’ve probably heard a lot of positive press lately about home values. In many areas of the country, including California, which is often considered a bellwether state for the rest of the nation, median home sale prices have been slowly creeping upward. This signifies to many analysts – armchair and otherwise – that the housing markets in these areas are making a slow but clear recovery.
However, I recently read an analysis that gives a very different take on the situation. In this analysis, the writer argued that the rise in median home prices is actually a product of more foreclosures on higher-priced properties. Essentially, the rise in median home prices is due, according to this analysis, to the fact that foreclosures are “steadily mov[ing] up from lower priced homes to more expensive ones”[1]. As a result, while median prices are climbing, the homes are still being sold for serious losses and the increase does not necessarily indicate a housing recovery.
Do you think that the rise in median home prices is a good sign, a bad sign or just plain irrelevant in the grand scheme of things?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-weak-housing-markets-mortgage-bankers-association-housing-bubble-trulia-zillow-core-logic-home-price-index-hpi-mda-dataquick-2674.php
Not to be a doomsdayer, however I believe and have believed that
we are going to have a double (at least) dip recession indicated
by my analysis, job market, government spending etc.
So, I believe this article to be right on the mark.
Totally irrelevant.
Anthony
Not only is this relevant (contrary to Anthony’s musings), but I think it quite interesting. The popular premise is that a growing median home price indicates rising home values when in fact, this article suggests that a relatively small number of higher priced homes could be skewing the numbers upward and giving a false impression of an improving market. Thank you for providing this information.
Foreclosures are increasing in the higher end markets in Northern California and prices are coming down in that market segment
Not the perfect time to be purchasing a high end property
Our lower priced inventory seems to have bottomed out is currently increasing in price much of it being purchase for cash by international investors
They seem to like the fact that they can purchase homes in a politically stable country below replacement cost that will cash flow with 25% down
A double dip recession would seem like a possibility coupled with very high inflation rates and rising interest rates
Both good reasons to invest in well priced leveraged real estate assets with positive cash flow and lock in currently record low long term
Relevant yes, when you have all the info. Statistics must be presented with complete data. Ot of context and yougetskewed data like this.
I wonder if anyone has asked the appraisers how thery are dealing with this market.
Median priced homes have and will prove to be good investments thoughout this crisis. People are starting to live within their means, general living expenses will rise over time (energy/food etc.) and force people to get back to the basics placing a demand on the median. Builders & car manufactures have been focused on high end homes & cars for years and are now out of business. Home values are based on affordability, we HAD low unemployment, low interested rates and easy money, home prices skyrocketed. Now we HAVE high unemployment, hard money and low rates. When the unemployment rates drop the interest rate will rise and affordability will remain on the median. Basically your weekly paycheck will only buy so much, if rates are low you can buy more home, if rates rise the home price must fall to fit your weekly paycheck. Crisis has been with us 2+yrs, the population has increased and building has almost stopped. When things start to takeoff median existing homes will be in demand!
We are going to have another dip, u r right on track. .median prices are
Irrelavent, all it is is a pricing fence line, does not indicate market
economics but gives warm fuzzy feeling.
8 mil units in shadows 14 mil underwater more strategic defaults
On they way no new good paying jobs gov programs not working
These are the real numbers and it will take 3 to 5 yrs b4 we see any
Real appreciation or stability. Smell the coffee folks.
While I may agree with the conclusion the analyst used faulty logic. it is common for people to mistake Median for Average.
If you have a median number then sold two more houses one at the very lowest price than any previous sales and another at the very highest price of any previous sales, the median sales price will NOT change. The AVERAGE sales price will change though.
So that analyst should re-examine his cause and effect reasoning.