We’ve touched on this before, but this Friday’s July 7 front page Seattle Times article by Ms. Rhodes (we like it better when she is away on assignment) http://seattletimes.nwsource.com/html/businesstechnology/2003110149_homesales07.html prompts a serious response:
Median price means that 1/2 of all unit sales were below that price, and 1/2 of all unit sales were above.
A rise in median home prices means that the availability of entry level homes is reduced i.e., there are no more, or very few, inexpensive homes for sale.
Example (not real numbers): In March there were 100 sales below $300,000 and 100 sales above. That makes $300,000 the median price.
In April there were 50 sales below $300,000 and 100 sales above. What happened to the median price? It moved up. Why? because there were fewer houses AVAILABLE below $300,000 while inventory and sales above $300,000 were the same. Simple.
In the past, Rhodes has usually qualified her use of the median price term. In this article she blasts right by it. People mistakenly equate the percentage increase in median price as an increase in the value of real estate.
Most of the upward price pressure in our local market is at the very low end, $150,000-300,00. There are far more buyers than sellers in this price range than there are at $500,000-650,000. There are fewer buyers still at $650,000-750,000. And the air gets pretty rare at $750,000-1,000,000.
But sales still take place at the upper price ranges. While recent appreciation has been significant, there are few places that have experienced double digit annual appreciation. The more expensive properties represent pretty good values for buyers at current interest rate and price levels.
So what’s up with Ms. Rhodes double digit thing? Headlines, and that’s about it. It is confusing and misleading to the public. It doesn’t just hurt the credibility of the housing industry, it also makes it more difficult for Microsoft, Boeing, etc., to recruit quality employees to our area.
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