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Realistbear

Our Mirror Market Shows The Median Still Rising

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In our mirror market the market is falling overall. However, the median continues to show a rise due to fewer, more expensive, homes being sold. IMO the same phenomena is occurring in our market (which mirrors the San Diego market in all past crashes):

http://www.dqnews.com/RRSCA0407.shtm

Slow sales, record median for Southland homes
April 12, 2007
La Jolla,CA----Southern California's housing market continued to send contradicting messages in March. Sales remained at a ten-year low while the median sales price increased to a new peak. The rise in median is in part due to a drop-off in sales of entry-level homes, a real estate information service reported...../
Prices in San Diego County have been flat the past half year, about five percent below their peak when adjusted for seasonality and shifts in market mix.

UK and SD compared over the years:

http://www.housepricecrash.co.uk/forum/ind...ost&id=4113

IMO, the "data" being released by EAs this late in the inflating house price cycle is reflecting the same kind of data emerging in our mirror market. However, there is at least a 6-12 month lag between our markets and slightly longer than in Great Crash 1 of 1989-96.

Edited by Realistbear

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Guest wrongmove
In our mirror market the market is falling overall. However, the median continues to show a rise due to fewer, more expensive, homes being sold.

RB - good set articles this morning - no spin required!

Just one point, the median is the middle house price, not the arithmetic mean. So it isn't actually skewed by a few expensive properties like the mean is - that is the point of using the median, rather than the mean.

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RB - good set articles this morning - no spin required!

Just one point, the median is the middle house price, not the arithmetic mean. So it isn't actually skewed by a few expensive properties like the mean is - that is the point of using the median, rather than the mean.

I have to disagree. IMO, the rise in median is in part due to a drop-off in sales of entry-level homes leaving more expensive homes to skew the data.

\Here is a US article on the "Median".

The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.
Changes in median price measure changes in market activity. When there are more buyers buying less expensive homes than there are buyers buying more expensive homes, the median price falls.
Conversely, when there are more buyers buying more expensive homes than there are buyers buying less expensive homes, the median price rises.
The median price indicates which price range is most active. Not all price ranges experience the same market activity at any given time.
Edited by Realistbear

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Guest wrongmove
I have to disagree. IMO, the rise in median is in part due to a drop-off in sales of entry-level homes leaving more expensive homes to skew the data.

Fair enough. Anyone who wants to can check the definition of median and decide for themselves.

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Fair enough. Anyone who wants to can check the definition of median and decide for themselves.

What it really shows is a downshift in activity. As prices fall overall the median must eventually shift downward as the market cannot continue to show increases based on fewer and fewer more expensive than average homes selling. Otherwise you would find yourself in a Xeno's paradox situation where the market never falls in price--something the EAs are trying to show by suggesting the median is rising in a falling market.

IMO, this is what is happening in the UK. The EAs are trying to show prices are still rising whereas (aside for London and the SE) prices are actually falling in real terms. The averages are showing increases (perhaps) but only because of the skewing median.

Edited by Realistbear

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Guest wrongmove
What it really shows is a downshift in activity. As prices fall overall the median must eventually shift downward as the market cannot continue to show increases based on fewer and fewer more expensive than average homes selling. Otherwise you would find yourself in a Xeno's paradox situation where the market never falls in price--something the EAs are trying to show by suggesting the median is rising in a falling market.

IMO, this is what is happening in the UK. The EAs are trying to show prices are still rising whereas (aside for London and the SE) prices are actually falling in real terms. The averages are showing increases (perhaps) but only because of the skewing median.

Well if the median is showing increases in the type of market you describe, the mean would be showing much bigger rises. Why don't they use the mean if they want to skew the figures?

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Fair enough. Anyone who wants to can check the definition of median and decide for themselves.

The median can be skewed by less entry homes being sold, the median refers to half the data values being above the median, and half below.

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Guest wrongmove
The median can be skewed by less entry homes being sold, the median refers to half the data values being above the median, and half below.

It sure can, but the mean would be skewed much more dramatically. Using the median would actually play down the effect, compared to the mean. To "spin" the figures in a market dominated by a few expensive house sales, you would definitely quote the mean, IMHO.

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It sure can, but the mean would be skewed much more dramatically. Using the median would actually play down the effect, compared to the mean. To "spin" the figures in a market dominated by a few expensive house sales, you would definitely quote the mean, IMHO.

Well perhaps they are not spinning. The median happens to be their measure of choice and it shows a rise due to fewer low end properties being sold. What's so difficult to understand?

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It sure can, but the mean would be skewed much more dramatically. Using the median would actually play down the effect, compared to the mean. To "spin" the figures in a market dominated by a few expensive house sales, you would definitely quote the mean, IMHO.

It is entirely possible the median has been used to talk up the market as you would expect them to try and do. Without seeing the data it is impossible to tell why they have used the median rather than mean, which is the great (bad) thing about statistics you can use them legitimately and correctly to tell the story you want.

Consequently, as I am sure was the reason for your post, you should avoid commenting on statistic with definite assertion without being privy to the full data set. Healthy scepticism would point to the Real Estate Profession wanting to paint a better picture than it is but that is up to you if you take that point of view.

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Guest wrongmove
Well perhaps they are not spinning. The median happens to be their measure of choice and it shows a rise due to fewer low end properties being sold. What's so difficult to understand?

It was RB who said they were spinning, not me. And the only evidence we have of a change of a mix in the properties is RB's hypothesis.

I am simply pointing out that if they were spinning, they wouldn't use the median as it is pretty robust to changes in the mix of properties.

All quite easy to understand. :unsure:

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