The National Association of Realtors released the news last week that the US median housing prices fell 7.6% as compared to the same quarter of 2007 to $206,500.
I say median smedian. What does median housing prices mean? Nothing. Do you actually know how median is calculated? It’s not, really. It’s literally the middle. There is no calculation.
I went to mathisfun.com where they display how to ”calculate” the median:
“How to find the Median Value
To find the Median, place the numbers you are given in value order and find the middle number.
Look at these numbers:
3, 13, 7, 5, 21, 23, 39, 23, 40, 23, 14, 12, 56, 23, 29
If we put those numbers in order we have:
There are fifteen numbers. Our middle number will be the eighth number:
3, 5, 7, 12, 13, 14, 21, 23, 23, 23, 23, 29, 39, 40, 56
The median value of this set of numbers is 23.
(Note that it didn’t matter if we had some numbers the same in the list)“
It’s the middle number in a sorted list of arbitrary numbers.
I know I’ve said it a thousand times – like here and here - maybe I should make it into a disclaimer – but statistics are deceiving. You have to know what you’re comparing. In this case, they’ve taken the whole United States. I don’t even compare two cities in San Mateo County, let alone the whole dang US.
This data is segregated by Metropolitan Statistical Area (MSA). The problem is that San Mateo County is grouped with San Francisco, Oakland and Fremont – markets ranging from one polar opposite to the other. Taken as a whole the SF MSA took a -19.1 hit. Yikes.
| 2005 | 2006 | 2007 | 2007 II | 2007 III | 2007 IIIV | 2008 I | 2008 II | % Change |
| 715.7 | 752.8 | 805.4 | 846.4 | 825.4 | 778 | 701.7 | 684.9 | -19.1 |
So let’s drill down. For the purpose of not giving me a headache, I’m going to focus on San Mateo County as a whole – which will still give me a headache to sort all this. But if I must…
| 2005 | 2006 | 2007 | 2007 II | 2007 III | 2007 IIIV | 2008 I | 2008 II | % Change |
| 1087.3 | 1107.3 | 1126.2 | 1163.5 | 1491.2 | 1209.3 | 1338.9 | 1181.6 | 0.98 |
So what does this mean? Nothing. It doesn’t indicate a thing. It doesn’t portray how much housing prices have gone up or down. It doesn’t portray the cost of buying a home. It doesn’t calculate whether housing values have gone up or down. It doesn’t tell YOU if it’s the right time for YOU to buy.
But if you listen to the media you have been told that we’ve taken a nose-dive when it truth San Mateo County as a whole has held steady. Again, to find out what’s happening in your neck of the woods, you have to drill even deeper.
If you’ve got questions, let me know. I’ll do my best to answer whatever you throw my way.
Vicki [at] CallVicki.com 650.888.9268
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August 18th, 2008 at 6:30 pm
Vicki,
Always thought this stat was nonsense. But those mathematicians needed extra buttons on the calculator.