Don’t Believe the Reporters about Median Home Values
Unless you’ve been on vacation or have sworn off news for awhile, you must have seen the recent headlines about home values.
It’s that time of the quarter when National Association of Realtors, Zillow.com and other research firms release home sales data. Especially in a slow news month, the press eagerly feasts on the news. But be very cautious believing their analysis and trends. Often, the reporters get it wrong. We find they tend to generalize trends, gloss over local nuances and draw the wrong conclusions.
For instance, Carolyn Said, a reporter with SF Chronicle said in an article on August 9 “ Values sagged not just in foreclosure-ridden exurbs…, but also in pricey ZIP codes like Stanford.” Not true. As we’ve been reporting for awhile, currently in the Los Altos/Palo Alto area, the low-end ($1M to $1.75M) price range is strong with little inventory and many multiple offers. But as you move up the price chain to over $2.5 million, the market is slower. Because more lower-priced homes are selling than higher priced homes, the median price of all sales in the area is down. Reporters inaccurately conclude prices are falling locally when the opposite is happening!
If you look at the movement of median home prices over a long period of time, say 2-3 years, you have a more reliable indication of price movement. But writers don’t use that long-term of a view in drawing conclusions about price movement.
Why does the press do this? Perhaps it’s the hope of selling more papers with splashy headlines or controversial assertions. Perhaps its as simple as not taking the time to dig deep. It takes dedication, focus and commitment to drill down into current local market activity and, with historical context, be able to draw informed and trusted conclusions.