Damned Lies and Median Home Prices

The bubble is bursting all around us and the National Association of Realtors comes out with a report that San Francisco Bay Area median home prices increased by 13% in the second quarter. Nooooo, can it be? If you can't trust NAR, who can you trust?

Stephen Bedikian of RealIQ has a nice piece today over at Inman News sorting through the confusion. He cites some Altos numbers to help make sense of the turmoil. Stephen concludes:

So what actually happened? Sales transactions increased with a greater proportion on the high end versus the previous quarter. There appears to have been little actual appreciation as evidenced by the Case Shiller and OFHEO numbers, while inventory increased and prices of many listed properties were reduced. So next time you read that median house prices have increased in your area, don't celebrate prematurely. Conduct more research before you reach a conclusion about market conditions in your area.

In addition to Stephen's suggestion of diversifying your stats, I'll add that if you're not looking local, you're not looking anywhere. The Bay Area market? Are you kidding? This spring, you could indeed watch a few key markets, like Palo Alto and up the Peninsula stay strong. But look even a few miles inland, say Antioch, and the carnage was everywhere.

To be fair to NAR, we reported the same trends for some of those parts of the Bay Area in February, March, and April. We also noted that by May, the Spring price growth had already begun to recede. (Notably correlated, by the way, with the widening spreads on jumbo mortgages that started at that time. Surprise! The high-end starts to fade when fat mortgages get more expensive.) So here we are five months later and NAR is telling you that San Francisco had a strong spring. Thanks guys.

[ps. sorry about the long hiatus from the blogosphere. Hope you've been enjoying Scott's posts on real estate e-marketing tactics. Our plan is to intersperse both topics together. Thanks to Stephen for getting me off my ass and posting. I like his work, we'll have to do more together in the future.]