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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (21236)	6/3/2004 2:07:08 AM
From: Spekulatius	Respond to of 306849

well if you have a thousand homes total selling in 2000, 1/5 of them selling above 1.2 million, and then 3 years later you have half as many homes selling with a slightly higher median price, I don't see that as a win . Lizzie, yes you hit the nail on the head. The ticky tacky 300k house in Daly city has appreciated, whilst the 5M$ mansion in Atherton stayed flat, which is totally consistent with the RE statistics. I am not argueing this point with you at all, other than the fact that this does not mean the statistic is fudges, it's just the way median's can work out. I do argue with you that the average guy worked at Yahoo. Those guys earning serious money with stock options are the exception, rather than the rule. Even in the 1999/2000 boom only a small minority of employees in the Valley got rich through stock options. Some dot-comers where rich on paper that was worthless at the time the stock would have vested - big deal. I don't count this as real money. I am not doubting the fact that the Valley is still in a recession job wise, but i do argue with you that the plain vanilla house priced at the median in 2000 has not appreciated since then, despite the bad economy. RE certainly has appreciated here, i can tell by sales in my area that houses have gone up 50% since 2000, as has the median for Santa Rosa (and the North Bay area). And the same has happened to houses in the East bay in Pittsburgh or thereabouts - the median does represent what a house priced close to the median does. From a statistical point of view, your 1.2M$ house is probably 2 Sigma away from the median of the distribution, so whatever the median does is basically meaningless in that range. This has not much to do with fudging, but more with the reality of statistics, on that point we apparently disagree.

To: Lizzie Tudor who wrote (21236)	6/3/2004 10:41:18 AM
From: David Howe	Read Replies (1) \| Respond to of 306849

Lizzie, The RE statistics are not fudged. I live in Sammamish (a Seattle suburb) and prices are much higher than they were in 2000. Houses in my neighborhood have been selling very fast, one sold in 3 days and it went for much more than I thought it would. Note that our neighborhood is in the $600k to $900k range, so I can't directly comment on the $1MM and higher market. Also, I have relatives in various locations including Florida, NY and Cal and they all say that prices have been moving steadily higher. Dave

To: Lizzie Tudor who wrote (21236)	6/3/2004 11:11:57 AM
From: GraceZ	Read Replies (2) \| Respond to of 306849

Sometimes I find it difficult to believe you were a math major. Median and average have their limitations as statistics. They can absolutely be correct and misrepresent your experience or even the experience of most of the people you know. For instance almost everyone you know will live longer than average. The biggest difference between stocks and RE is that in the case of stock, every share of a company's stock (in the same class) is identical to every other share of stock. Houses with identical plans in different locations can have substantially different prices. Other than that difference, there is little difference in the way that they are priced, at the margin where transactions occur. If you have few transactions, be they high or low, this is how price is reported. If your friends sitting on 1.2 million dollar properties were willing to realize their loss and sell then they would contribute to the stats and bring down the average appreciation. It takes a transaction to effect the statistics. Meanwhile those houses which are selling significantly higher are effecting the median and average. Friends of mine bought a house in San Rafael for 300k in 1999, now it would sell for 650k. The reason they know this is because they've wanted to buy a nicer property and they find that they can't find anything nearly as nice at 650k. Houses in their neighborhood sell at or higher than 650k. Another friend in Novato bought a house in 2000 for 196k and it would now sell for 400k. All the houses on her street have the same plan, so she knows what the comps are. You may think that the "Bay Area" had nothing but million dollar houses in 2000, but I can assure you it did not. San Rafael and Novato aren't exactly what I'd call the hinterlands even if they might as well not exist to someone who never leaves SV. Your very specific area was bid up on a wave of easy stock option money, take that away and prices revert to the mean but only if those holding are willing to sell at a loss.