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ZT from New2OC
oc bear,
I was just thinking about this today. Here are 10 hypothetical sales: $1,050,000 $1,000,000 $950,000 $925,000 $650,000 $625,000 $600,000 $575,000 $550,000 $500,000
The median here is $637,500, with an average of $742,500 for 10 sales.
Now, next month, suppose the market is drying up, and 30% fewer (identical) homes have sold, all from the low end. And, to make things worse, the remaining (identical) houses sell for 30% less. Using the top seven values from this example, and reducing their price by 30% (and eliminating the sale of the bottom three houses).
The house sale prices are now (same houses with 30% drop, no low end sales): $735,000 $700,000 $665,000 $647,500 $455,000 $437,500 $420,000
The median here is $647,500, with an average price of $580,000.
The median is up 1.6%, so all is well, right? The NAR is more than happy to report the median. In fact, I suspect that the median may be more insensitive to downside movement than upside. If all 10 houses still sold at a 10% price increase, the median would move up 10%. However, if prices are falling as volume is falling, the median may remain stationary. |
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