The smoke screen of the "Median Price"

In the last post the CAR say's the median in Riverside/San Berdu is down 15.6%. I noted at the end of the post that the Median does not accurately reflect the drop in price. The reason the Median does not accurately reflect the true drop is that the "mix" of homes selling has changed. These days there are more higher end homes selling than low end homes. This artificially keeps the median higher. I found a perfect graph over on Piggington's that illustrates this. In the graph you can see the mix of homes is split into High Priced, Medium priced, and Low Priced. You can see the sales numbers of each type stayed close together until early this year. That means the median was probably fairly accurate until sometime around Spring 2007. Then the Low and Medium priced homes started to diverge from the high end homes. High end homes continue to sell better while the lower and medium priced homes were not selling. The higher number of high priced homes in the data sets is keeping the median price high. But this does not accurately reflect the true drop in prices that homes are selling for. I think it should be obvious by now, after the hundreds of homes I have shown on this blog that the prices are off 30% to 40% at a minimum in the IE.


Note, this chart is for San Diego. I would expect the IE is not too different, if anything our low and medium ends are probably worse.

Free houses by next winter? October Numbers

How's this for a headline? "At the current rate of decline homes will be free by next winter". The median price in Riverside has dropped about $25k for the last 2 months. In August the median was $394, last month the median sales price was $374 and this month it is $350k. Dropping $25k per month it would only take 14 months for the median to be zero.... This is a fine example of how numbers and trends can be twisted to reflect just about any type of propaganda.

Back to reality for a second. At the current rate Riverside will drop below $300k median in December or January. Where should Riverside's median be? If you read the post a few months ago, using the NAR charts for Riverside I calculated the median would be between 150K and 225k if the market had been "normal" for the last 6 years.


The numbers for October were dismal. No surprise there really! We set another record low for sales, at least as far back as DataQuick records go (1988). Riverside sales were down 44% from last year and the median price was down 15%. San Berdu did not do much better with sales down 55% and the median price down 10%.

Riverside county had 2463 sales last month and there are roughly 32,300 homes for sale (on the MLS). That equates to a 13 month supply of homes. San Berdu sold 1603 and it has 22,900, giving it over 14 months of inventory.