Much has been written in recent months about the shortcomings and pitfalls of measuring how much home prices have risen and fallen by computing the median prices of homes.
It is, after all, only one of several ways to compute changes in home values. We can also use average prices, or “consistent-quality” homes (that theoretically allow us to compare the selling prices for truly comparable homes). All have their advantages and their weaknesses.
Remember that the median price in any given month is arrived at by lining up all the selling prices for the month and simply extracting the price that is in the middle. The problem here is that the median price will fall further if more lower-priced and fewer higher-priced homes are selling — as has been the case quite recently — and vice versa.
(And just for the record, our pending sales in the Santa Barbara market area are tracking week-to-week about 75 percent under $1 million and 25 percent over.)
While this means the median price computation can stretch our understanding of how much more or less a home is worth today, the median price still serves to give us a good, general idea of where home values are and have been.
But to get a clearer, more specific and, most importantly, more usable idea of the value of a home, nothing can replace the competitive market analysis your real estate professional can provide or the appraisal that a professional can develop.
Median price surveys look at homes that sold in too large an area — a city, county, state or country — to provide specific information. Call your Realtor for more specific guidance, especially in estimating the market value of your own home. Median price fluctuations are applicable to large market segments, but not necessarily to your individual home.
— Paul Suding, a real estate agent with Cool Santa Barbara Homes and Village Properties, is president of the Santa Barbara Association of Realtors. He can be contacted at .(JavaScript must be enabled to view this email address) or 805.455.8055.
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