Confusing Median Home Prices
By Namneet Dhaliwal Realtor, Orange County CA
July 12, 2007
The numbers are conflicting with the actual market value of homes.
Many people look at the median sale price to gauge current real estate market trends. Median sales prices can be very deceptive as it only measures the middle point of properties sold above and below that price regardless of the size, age or location of the property. If one month more homes sold in a higher priced neighborhood of the city, it will bring up the median price. In this market with a low affordability index, increased home listings on the market and tighter lending guidelines, many people are having a hard time keeping up with mortgage payments. It has been difficult for an entry level buyer to buy at today’s price, and as these buyers get pushed out of the market the number of lower end home sales are going down hence resulting in a false increase in the median price. Here is an example of a few cities of Orange County CA Real Estate.
City | Avg Sales Price 06/07 | Avg Sales Price 05/07 | Avg Sales Price 04/07 | Avg Sales Price 03/07 | Avg Sales Price 02/07 | Avg Sales Price 01/07 |
Buena Park | $599,073 | $606,357 | $564,942 | $572,644 | $537,481 | $535,027 |
BREA | $753,476 | $626,460 | $641,905 | $646,825 | $676,585 | $594,220 |
Fullerton | $718,423 | $691,356 | $686,132 | $658,307 | $669,594 | $593,118 |
La Habra | $523,394 | $624,686 | $580,765 | $586,924 | $567,841 | $497,558 |
Placentia | $627,090 | $542,159 | $671,250 | $630,153 | $572,833 | $560,332 |
Yorba Linda | $904,730 | $893,445 | $793,375 | $800,960 | $834,579 | $828,742 |
Average | $687,697 | $664,077 | $656,394 | $649,302 | $643,152 | $601,499 |
Source SoCal MLS
The majority of these cities except Buena Park and La Habra CA for the month of June 2007 are showing increase in the average sales price. Contrary to this, the fact is that the majority of recently sold homes were actually sold below the last sale of a similar home in the area. In conclusion, the median price alone is not an accurate and true measure of the real estate market.