WHY DOES YOUR MARCH 3RD ARTICLE BELOW THIS ONE INDICATE THAT AVERAGE FEBRUARY 2006 SALES PRICES WERE 360,000, UP 7.5% FROM FEB. 2005? YOUR NUMBERS APPEAR INCONSISTENT BECASUE YOU ARE NOW CLAIMING A MUCH HIGHER NUMBER FOR SAC COUNTY SALES. I AM SUSPICIOUS OF YOUR NUMBERS AS YOU HAVE A VESTED INTEREST IN PERPETUATING THE REAL ESTATE BUBBLE.

Peter – He says “Average” prices were just under $400k. It’s “Median” that was $360k.

While we’re on it, John – any advice for interpreting “Median” versus “Average” sales data?

Thanks!

Dan

wish i had gotten in jan 05! thanks for the graph.

No need to shout, Peter, and yes, Dan, you’re right. Peter, before you level a circumstantial ad hominem at me, please be clear about the difference in meaning between median and mean.

As for my “vested interest in perpetuating the real estate bubble”, do you really think this blog sets the value of home prices in Sacramento? That’d be really cool if true — I could then buy a bunch of houses at $400,000 and tell everyone they were worth $800,000 and sell them. Actually no one who reads the blog buys houses from me anyway, the blog is just here to provide content so the search engines can find me, so the real buyers can find the listing search tools and start looking at the houses. Over and above that, it’s an entertaining way to meet some nice folks like all of you who responded in the thread, but it’s pretty much a “loss leader” as a business proposition.

As for mean versus median, Dan, good question, but I don’t know how to interpret them, to tell the truth. I tend to watch the averages and ignore the median (except to report it for informational purposes). Actually the number I like best for tracking purposes is average cost per square foot, but even that value fails to account for age and the like. If the sample size is big (as it is here, for example, all of Sac County), it probably doesn’t matter much. But when I report on Pollock Pines and there are ten sales, for example, sometimes the “average” is based on a pretty meager sample, and hence you can often get weird results like 50% increases in value and the like — cost per square foot helps mitigate that slightly.

Or better yet, Tracey, 1992!

Half empty, half full? Plus minus 1 or 2 % month to month isn’t data it is a data point. The pessimist would proclaim Feb median prices were the second lowest in all of the last 8 months. What about volume? That is another part of turning data points into data. A decrease in the number of sales can easily account for many times more than a 1% median rise. With the six month trend in appreciation at -7% annualized and the y-o-y trend at +15% anyone can say anything they want with the statistics at inflection points.

Then there’s the actual numbers you report. The SacBee DQNews chart for Jan ’06 shows the median county price for SFRs to be $352,500 up 10.2% y-o-y yet your “graph” shows $392,000 up 14%. Somebody’s missing something. $40,000 difference twixt your claims and DataQuick is not a reason to trust these numbers at all.

Oh and since you had to go back to Jul-Aug for your “Prices Rise Again” I was surprised the Headlines didn’t read “Price Finally Rise for the first time in 6 months erasing nearly 20% of the loses from the peak.”

Yes, someone is indeed missing something — the someone is you, and the something is the difference between “median” and “mean”. Scroll up — Dan pointed out that that’s the reason for the discrepancy already earlier in this thread. The side of the chart gives the scale of what I’m discussing, “Average Sale Price”. The Sacramento Bee was quoting the median, not the mean. If you need to understand the difference, Ask Dr. Math.

As for interpretation, given the background noise of pessimism that I have to contend with, I make no apology. Sacramento Landing recently spun a less than 1/2% yearly depreciation rate in one county in California as evidence of a “hard landing”.

As for me having a “vested interest” in something as opposed to the famous objectivity of newspapers, please. The Sacramento Bee reports the worse numbers they can find. They’re a newspaper. “If it bleeds, it leads.” Did you ever see a report in the Bee about someone going to work and not getting into a car accident, or about a country not going to war? The stock market’s did incredibly well earlier this year — did you see any front page headlines about that?

Real estate sales are off this year, expireds are up, inventory’s up. If you haven’t seen me say that at least dozen times, then welcome to the blog — scroll down (especially in the market updates category) and you’ll see it. I report on what the market’s doing. When I talked about the numbers being down, it was utterly uncontroversial, and only another Realtor® complimented me for a balanced view. Of course, the doom blogs were perfectly content to use my numbers as grist for the mill. (Don’t get me wrong, guys, I appreciate the links — use me, use me. …)

When the averages go up again I say the averages went up again. Life is complex. Pardon me if I don’t see it as you want me to see it, as an all too brief and charmless hiatus before an inevitable death.

Oh, by the way, do you know anyone looking to buy or sell?

The bubble still exists. Just not everyone knows. A lot of dummies are buying with interest only still. That explains the jump up. Also, there is a dead cat bounce going on here. The dot com crash had bumps going up. The owner of this blog would have said “see, the market went up, so there is no impending crash”. That of course was baloney and remains baloney.

Really, so those dummies weren’t buying using interest only loans in January and December, but they started in February? So when we were on the down slope, were those folks buying using more traditional, fully amortized loans?

What about last January through August, of for that matter the last ten years, when prices were going up? Were we using interest only loans the whole time, or only as needed to rescue the apocalyptic predictions?

As for the baloney in words I never said, no worries. Have your straw man say whatever you like, and then craft from it baloney, or some other sandwich meat. For some reason I’m in the mood for liverworst.

Actually, unlike the bubble crowd, who are fairly convinced that they know which direction the graph will head next, I’m fairly agnostic about the future, except when I’m being quoted saying something I didn’t say, at which times I’m quite beside myself, really. Most of the time I’m not so much beside myself as neither here nor there.

Anyone want to guess what average price I’d find if I ran “March so far”? Before I do, why don’t you tell me…are there still dummies using interest only loans, or have they stopped?

Sacramento Metro, Including Sacramento/El Dorado/Placer/Yolo Counties
Mar 2005 3,500 listings
Mar 2006 11,000

That’s what 8 months supply? Up from 1.5 months a year ago.

Unless the laws of supply and demand have been suspended the only question is how long it will take for the price declines to show up in the sales data.

Despite your nasty condescending “ask Dr Math” comments I was indeed talking about your use of average when the accepted practice is to use median. Why not ask Dr Math which is the prefered method? He’ll tell you median. Do I have to draw out a r squared correlation for you to show why?

The average home in SacCo in 2005 was $245/sq ft the same as this year so far. (And yes this time average is the correct basis.) You yourself say that you trust the price per sq ft. What does flat y-o-y tell you in this market where prices are down significantly (that’s a math term not an opinion) from their peaks and the number of sales are down and there is a large difference between the average and the median? It’s a math thingy so I’ll explain it to you; entry level homes and first time buyers are not participating in this market.

There is a bubble and it has burst and the only question is how loud it will prove to have been when the sound reaches our ears. The evidence in the trends above and the national data regarding mortgage originations and PMI insurance policies written and the recent stock hits in ECR and such. Not all the data arrives at the same speed.

With more than half of all mortgages in Sacramento being some form of exotic with variable rates it is yet another nail in the coffin to examine the bank rates; 3/1 ARMs up 250bp in 2 years. This impacts monthly carrying costs for potential buyers. Then there’s the previous buyers holding exotic mortgages. Nationally some $600 billion is scheduled to reset this year and $1.8 trillion in 2007. These loans are disproportionately in high appreciation areas like Sacramento.

You want another 2 months or quarters of respectable prices, even median prices? Fine, that’s well within the range of what a popped bubble can look like. I think what people are objecting to is your touting a piddling 1% m-o-m increase in the average price after 5 months of flat or declining prices as if this were proof that there’s no bubble. We don’t have proof yet one way or another, only evidence of an evolving situation.

Now that you know I was commenting on your misuse of the average price not misinterpreting your claims especially in light of your own admission; “As for mean versus median, Dan, good question, but I don’t know how to interpret them, to tell the truth.” perhaps you’ll be a little slower to pull the trigger in those ad homineums yourself. The $40k difference still remains uninvestigated. I find it suspiciously large but as I said; “…difference twixt your claims and DataQuick is not a reason to trust these numbers at all.” The nature of a product like housing is such that the average will always be higher than the median, it’s a math thigy, I won’t bore with the details. Perhaps you thought I said I didn’t trust the numbers and that drove the tone of your response? Then again you also seem to think there is some mysterious “background noise of pessimism” permeating the Sacramento housing market. What you call noise, those of us who understand the metrics call data points.

Well, that’s fine, you object to me touting a piddling 1% month to month increase as evidence that there’s no bubble, and using average prices when the trend among the doomsayers is to use the median. Gotcha. So why did you write it as below? Did you want to hide your R-squared light under a rhetorical bushel?

“Then there’s the actual numbers you report. The SacBee DQNews chart for Jan ‘06 shows the median county price for SFRs to be $352,500 up 10.2% y-o-y yet your “graph” shows $392,000 up 14%. Somebody’s missing something. $40,000 difference twixt your claims and DataQuick is not a reason to trust these numbers at all.”

If you understood what you were saying the first time around, why didn’t you say it?

There’s no “mysterious” background noise of pessimism. Those of you who enjoy wallowing in the misfortunes of Realtors® and those with equity in Sacramento under the rubrick of “understanding the metrics” get pretty mightily moved to help me develop my web site whenever any of the metrics don’t go your way. Actually so far it looks like they will go your way for March. Lucky you, someone’s losing equity, and some of my colleagues are struggling in their business, a fact one might say you find amusing, if what you’ve posted on your site can be said to amount to a joke. (I notice you put your own laugh track (“giggle giggle“) in one of them — do you find that helps?)

Hey, when the market corrects there’s gonna be a lot of people hurt not just the guilty. There’s no joy in what is coming although some people will get some small part of what they deserve. Realtors® are already feeling the pain of reduced sales volume as I’m sure you are aware. This is nothing compared to the pain disintermediation will cause as part of the fallout of a declining market. Municipalities are in for a big surprise as their costs skyrocket at a time of reduced property taxes.

As to my tongue in cheek Realtor® jokes, come’on grow some skin you guys are the new lawyers. I bet you can even think of a few Realtor® bimbos that I lambaste. A few bad ones are gonna paint the picture no matter how unfair that may be. One way to cement that reputation is to ignore the entirety of the facts that people are posting.

So now because I don’t bow to your superior R-squared-ness, my reputation suffers?

No, that’s a gift I don’t accept. I’ve reported on the market fairly for several months now, and I have post after post showing in some detail when inventory is up, expireds are up, sales volume down, prices down. My posts have even been used as the grist for the mill for a local blog that I had characterized as being bearish on the market — but to their credit they also treated February’s news of an uptick fairly.

If you were asked to draw a graph depicting a “soft landing”, that graph would look precisely like the graph in this thread, no?

As the graph looks now, that’s definitely how I take it, yes, but I frame no hypotheses as to the future direction. March’s numbers may encourage the bears further.

Really the whole debate about what the market’s going to do is only interesting to me inasmuch as it affects buyer perception. One agent recently blamed the whole slow down on folks sheepishly following the media, since interest has not gone up that much from last year. I think there’s a lot of that in play as a cause, but it may be in as much trouble as the “market overvaluation” theory in explaining why we’re doing badly compared to Berkeley, for example. Both areas are likely overvalued. Both have the press rubbernecking the numbers and waiting for the train wreck. It’s a wonderful little chicken-egg problem, isn’t it?

[...] Resale home sales are up slightly in February compared to January’s number, The National Association of Realtors reported yesterday, but are still down slightly from a year ago. In related news, I recently reported on an increase in prices in February in Sacramento County. [...]

I have a question about the national median price: Why does the NAR have it at around 209k while the US Census Bureau pegs it at around 230k? That’s quite a spread.

It’s a good question, Larry, but I have no idea. Possibilities include different databases (MLS versus Dataquick or the like), or simply reporting on different time frames.