May’s median sold price fell significantly to $175,000 – down $4,450, or 2.5 percent from April’s median of $179,450. YOY, May’s median was unchanged from May 2009.
May’s sold price per square foot also dropped from April’s number; to $101.75/square-foot, a 1.3 percent decrease from April’s sold price per square foot of $103.08. …And also down YOY from May 2009’s $102.29.
The number of houses sold in May was 433 units – a noticeable decrease, 14.4 percent, from April’s 506 units sold.
May’s sales break out as follows:
- Bank-owned properties – 28% – down from April’s 30.5%
- Short sales – 34.6% – up from April’s 32.4%
- Equity sales – 36.5% – unchanged from April
For those readers who prefer the median sold price for houses and condos combined, May’s 512 sold houses and condos exhibited a combined median sold price of $159,200 – down 3.5 percent from April’s combined median of $165,000.
New this month, by suggestion, I am adding columns to the table for number of listed and pending properties.
| Month Year | # Sold | Sold Price | Sold Price per SqFt | Average DOM | # of Listings | # of Pendings |
| May 2010 | 433 | $175,000 | $101.75 | 138 | 1,789 | 1,804 |
| Apr 2010 | 506 | $179,450 | $103.08 | 128 | ||
| Mar 2010 | 477 | $176,000 | $99.44 | 143 | ||
| Feb 2010 | 338 | $170,000 | $101.68 | 138 | ||
| Jan 2010 | 346 | $167,000 | $97.06 | 134 | ||
| Dec 2009 | 420 | $176,500 | $101.15 | 127 | ||
| Nov 2009 | 460 | $175,000 | $103.51 | 112 | ||
| Oct 2009 | 560 | $180,000 | $103.65 | 124 | ||
| Sep 2009 | 520 | $185,948 | $103.31 | 128 | ||
| Aug 2009 | 482 | $179,900 | $102.64 | 116 | ||
| Jul 2009 | 515 | $180,000 | $103.45 | 126 | ||
| Jun 2009 | 536 | $180,317 | $104.09 | 136 | ||
| May 2009 | 426 | $175,000 | $102.29 | 139 | ||
| Apr 2009 | 429 | $190,000 | $105.71 | 133 | ||
| Mar 2009 | 369 | $200,000 | $105.85 | 133 | ||
| Feb 2009 | 293 | $205,000 | $111.52 | 132 | ||
| Jan 2009 | 233 | $200,000 | $113.04 | 117 | ||
| Dec 2008 | 294 | $218,950 | $121.74 | 145 | ||
| Nov 2008 | 269 | $220,000 | $122.24 | 152 | ||
| Oct 2008 | 354 | $230,000 | $131.43 | 144 | ||
| Sep 2008 | 358 | $239,250 | $136.72 | 145 | ||
| Aug 2008 | 321 | $250,000 | $142.14 | 140 | ||
| Jul 2008 | 397 | $251,000 | $145.48 | 139 | ||
| Jun 2008 | 369 | $262,500 | $148.05 | 142 | ||
| May 2008 | 314 | $260,215 | $152.30 | 134 | ||
| Apr 2008 | 314 | $275,000 | $154.05 | 172 | ||
| Mar 2008 | 238 | $274,000 | $150.93 | 166 | ||
| Feb 2008 | 195 | $289,000 | $156.48 | 149 | ||
| Jan 2008 | 165 | $285,000 | $170.23 | 146 | ||
| Dec2007 | 228 | $283,950 | $167.22 | 143 | ||
| Nov2007 | 204 | $299,750 | $172.24 | 126 | ||
| Oct2007 | 241 | $296,000 | $173.55 | 116 | ||
| Sep2007 | 230 | $299,945 | $179.46 | 114 | ||
| Aug2007 | 311 | $305,000 | $182.49 | 118 | ||
| Jul2007 | 300 | $315,000 | $189.78 | 113 | ||
| Jun2007 | 329 | $320,000 | $196.78 | 104 | ||
| May2007 | 364 | $313,200 | $190.81 | 107 | ||
| Apr2007 | 320 | $309,500 | $193.93 | 121 | ||
| Mar2007 | 324 | $315,000 | $189.61 | 121 | ||
| Feb 2007 | 269 | $315,000 | $191.18 | 126 | ||
| Jan 2007 | 245 | $312,900 | $199.79 | 133 | ||
| Dec2006 | 291 | $309,000 | $193.51 | 114 | ||
| Nov2006 | 281 | $318,000 | $197.32 | 111 | ||
| Oct 2006 | 363 | $312,400 | $201.44 | 105 | ||
| Sep2006 | 344 | $314,950 | $198.08 | 98 | ||
| Aug2006 | 349 | $325,000 | $210.92 | 94 | ||
| Jul2006 | 373 | $335,000 | $210.62 | 93 | ||
| Jun2006 | 424 | $339,000 | $214.54 | 91 | ||
| May2006 | 374 | $339,950 | $219.05 | 99 | ||
| Apr2006 | 368 | $334,600 | $212.08 | 88 | ||
| Mar2006 | 387 | $340,000 | $215.54 | 99 | ||
| Feb 2006 | 283 | $335,000 | $217.29 | 101 | ||
| Jan 2006 | 274 | $365,000 | $216.38 | 98 | ||
| Dec2005 | 333 | $355,000 | $217.31 | 89 | ||
| Nov2005 | 385 | $349,000 | $220.00 | 81 | ||
| Oct2005 | 484 | $359,450 | $223.06 | 77 | ||
| Sep2005 | 531 | $354,500 | $219.26 | 77 | ||
| Aug2005 | 582 | $360,500 | $220.52 | 73 | ||
| Jul2005 | 608 | $353,000 | $218.99 | 71 | ||
| Jun2005 | 679 | $350,000 | $215.69 | 69 | ||
| May2005 | 644 | $333,250 | $209.95 | 68 | ||
| Apr2005 | 558 | $326,750 | $207.57 | 77 | ||
| Mar2005 | 584 | $325,000 | $200.17 | 81 | ||
| Feb 2005 | 342 | $318,500 | $197.54 | 88 | ||
| Jan 2005 | 341 | $310,000 | $195.19 | 85 | ||
| Dec2004 | 450 | $312,500 | $190.72 | 77 | ||
| Nov2004 | 448 | $309,950 | $191.62 | 63 | ||
| Oct2004 | 512 | $299,250 | $188.72 | 53 | ||
| Sep2004 | 496 | $292,750 | $185.78 | 61 | ||
| Aug2004 | 505 | $285,000 | $182.95 | 56 | ||
| Jul2004 | 544 | $304,300 | $179.28 | 61 | ||
| Jun2004 | 533 | $285,000 | $172.16 | 65 | ||
| May2004 | 476 | $278,750 | $169.64 | 65 | ||
| Apr2004 | 526 | $259,950 | $158.08 | 67 | ||
| Mar2004 | 508 | $245,000 | $142.56 | 71 | ||
| Feb 2004 | 365 | $237,000 | unavailable | 81 | ||
| Jan 2004 | 379 | $229,000 | unavailable | 78 | ||
| Dec2003 | 441 | $240,000 | unavailable | 82 | ||
| Nov2003 | 444 | $220,750 | unavailable | 78 | ||
| Oct2003 | 430 | $219,880 | unavailable | 76 | ||
| Sep2003 | 587 | $223,000 | unavailable | 71 | ||
| Aug2003 | 512 | $220,000 | unavailable | 75 | ||
| Jul2003 | 533 | $210,000 | unavailable | 77 | ||
| Jun2003 | 475 | $207,000 | unavailable | 77 | ||
| May2003 | 450 | $198,950 | unavailable | 85 | ||
| Apr2003 | 478 | $197,750 | unavailable | 82 | ||
| Mar 2003 | 428 | $192,000 | unavailable | 77 | ||
| Feb 2003 | 321 | $186,895 | unavailable | 79 | ||
| Jan 2003 | 316 | $186,000 | unavailable | 96 | ||
| Dec2002 | 379 | $193,500 | unavailable | 93 | ||
| Nov2002 | 423 | $190,000 | unavailable | 82 | ||
| Oct2002 | 483 | $189,900 | unavailable | 83 | ||
| Sep2002 | 410 | $174,000 | unavailable | 85 | ||
| Aug2002 | 459 | $180,000 | unavailable | 74 | ||
| Jul2002 | 469 | $176,000 | unavailable | 83 | ||
| Jun2002 | 445 | $185,000 | unavailable | 80 | ||
| May2002 | 470 | $178,450 | unavailable | 77 | ||
| Apr2002 | 360 | $169,500 | unavailable | 93 | ||
| Mar 2002 | 377 | $169,000 | unavailable | 84 | ||
| Feb 2002 | 323 | $170,900 | unavailable | 89 | ||
| Jan 2002 | 268 | $172,475 | unavailable | 99 | ||
| Dec2001 | 287 | $182,000 | unavailable | 86 | ||
| Nov2001 | 323 | $161,500 | unavailable | 85 | ||
| Oct2001 | 357 | $166,500 | unavailable | 79 | ||
| Sep2001 | 355 | $168,000 | unavailable | 81 | ||
| Aug2001 | 448 | $160,350 | unavailable | 84 | ||
| Jul2001 | 433 | $169,900 | unavailable | 90 | ||
| Jun2001 | 426 | $166,225 | unavailable | 96 | ||
| May2001 | 404 | $162,050 | unavailable | 97 | ||
| Apr2001 | 370 | $158,750 | unavailable | 94 | ||
| Mar 2001 | 385 | $159,900 | unavailable | 97 | ||
| Feb 2001 | 294 | $159,950 | unavailable | 103 | ||
| Jan 2001 | 264 | $165,000 | unavailable | 102 | ||
| Dec2000 | 272 | $156,500 | unavailable | 100 | ||
| Nov2000 | 355 | $154,500 | unavailable | 93 | ||
| Oct 2000 | 348 | $153,000 | unavailable | 98 | ||
| Sep2000 | 356 | $160,000 | unavailable | 104 | ||
| Aug2000 | 412 | $163,375 | unavailable | 94 | ||
| Jul2000 | 368 | $155,000 | unavailable | 110 | ||
| Jun2000 | 466 | $165,845 | unavailable | 104 | ||
| May2000 | 363 | $158,000 | unavailable | 105 | ||
| Apr2000 | 312 | $155,000 | unavailable | 113 | ||
| Mar 2000 | 339 | $162,700 | unavailable | 102 | ||
| Feb 2000 | 244 | $149,620 | unavailable | 110 | ||
| Jan 2000 | 217 | $156,000 | unavailable | 112 | ||
| Dec 1999 | 264 | $155,000 | unavailable | 118 | ||
| Nov 1999 | 293 | $149,900 | unavailable | 98 | ||
| Oct 1999 | 289 | $147,895 | unavailable | 108 | ||
| Sep 1999 | 311 | $157,000 | unavailable | 106 | ||
| Aug 1999 | 360 | $148,500 | unavailable | 112 | ||
| Jul 1999 | 375 | $147,800 | unavailable | 105 | ||
| Jun1999 | 372 | $150,000 | unavailable | 103 | ||
| May 1999 | 307 | $145,500 | unavailable | 106 | ||
| Apr1999 | 324 | $151,700 | unavailable | 111 | ||
| Mar 1999 | 308 | $151,000 | unavailable | 121 | ||
| Feb1999 | 249 | $148,900 | unavailable | 120 | ||
| Jan 1999 | 210 | $143,000 | unavailable | 115 | ||
| Dec 1998 | 265 | $140,000 | unavailable | 118 | ||
| Nov 1998 | 279 | $153,000 | unavailable | 126 | ||
| Oct1998 | 286 | $142,825 | unavailable | 115 | ||
| Sep 1998 | 279 | $144,500 | unavailable | 102 | ||
| Aug 1998 | 331 | $145,000 | unavailable | 113 | ||
| Jul 1998 | 335 | $150,000 | unavailable | 108 | ||
| Jun 1998 | 351 | $148,500 | unavailable | 103 | ||
| May 1998 | 302 | $145,500 | unavailable | 99 | ||
| Apr 1998 | 235 | $149,000 | unavailable | 111 | ||
| Mar 1998 | 267 | $142,500 | unavailable | 114 | ||
| Feb 1998 | 201 | $139,900 | unavailable | 126 | ||
| Jan 1998 | 165 | $149,490 | unavailable | 131 |
Note: The medians table above is updated on a monthly basis. The median home price data reported covers the cities of Reno, Nevada and Sparks, Nevada [NNRMLS Area #100]. Residential data includes Site/Stick Built properties only. Data excludes Condo/Townhouse, Manufactured/Modular and Shared Ownership properties. Data courtesy of the Northern Nevada Regional MLS – June 2010. Note: This information is deemed reliable, but not guaranteed.
MikeZ
May 09-10 YoY median price change: 0%.
May 09-10 YoY $/sq-ft change: -0.5%
OK, rhetorical question time: If that’s not stability, what is?
bob
It could be if the goverment was not proping up the market during this time period
smarten
Thanks Guy for modifying your format to include # of listings and # of pendings. I’m just curious; 1,789 listings seems an awfully small number given the number of sales [a 4+ month absorption rate?]. Am I wrong? Or is the number of listings the total of listings and pendings?
And FWIW, I wouldn’t read too much in the very small median sales price change. We’re still operating within the $170K-$180K range we’ve essentially been in for more than a year now.
And, so much for the SFR median sales price “crashing.”
LikeBigBottoms
DJIA: Mar 19, 1999: 9,900
DJIA: Jun 07, 2010: 9,930
If that’s not stability, what is? Simply cannot lose.
skeptical
Reno Median Sales Prices:
Dec 2001: $182,000
Jun 2010: $175,000
If that’s not stability, what is?
GrandWazoo
“Now is a great time to buy!”.
skeptical
This report is dreary, at best.
I expected a bit more follow through from April from the last minute tax credit contracts signed, to be transferred in May/June. But a volume decrease in sold properties of 14% in the busy part of the season, especially with the “tax-credit bump” still influencing events doesn’t augur well.
PPSF also back down near historic lows. Perhaps April was an aberation and buyers felt generous due to the extra $8k in their pockets?
Any decrease in the Median at all from here takes out Smarten’s “bottom.” PPSF has already taken out the May 2009 levels. Does anyone think June will be stronger than May?
Smarten and MikeZ continue to blow sunshine while telling everyone else to “focus on the data.”
I’m focused on the data, and it certainly doesn’t fill me with a sense of confidence that the worst is behind us. This air pocket, even while tax credit sales are working through the system has to give pause to any objective observer.
I thought we’d need to wait until July/August for the market tell on where we were headed. Perhaps I was optimistic….
MikeZ
LOVE watching the permabears come up with new excuses every month! Oh, wait, forget YoY … look at the Dow! Look at 2001!
Denial … ain’t just a river in Egypt, fellas.
Guy Johnson
smarten,
Thanks for the question. The “# of listings” refers to Active, non-pending listings. Perhaps I’ll change the heading to “# of Actives”. Unless you’d prefer that I combine Actives and Pendings, and then label it “Listings”. Which do you prefer?
smarten
On June 1, 2010 PriceitRight “predict[ed] that the median sold price for May w[ould] plunge to a new low…” Well he/she was wrong.
May 2009 – $175K median sales price – 426 unit sales – 139 DOM. May 2010 – $175K median sales price – 433 unit sales – 138 DOM. Looks a whole lot to me that for the last 13 months we’ve been skating along “A” [rather than “the”] bottom. You permabears keep reading whatever it is you want to read into these numbers and attributing your conclusions to MikeZ, I and others when all we’ve actually said is that based upon “this” data the SFR market has STABILIZED.
For me personally, the telling month is going to be July. Do you permabears really, really, really think the SFR median sales price is going to crash over the next two months when we’re at the height of the selling season and mortgage rates [at least compared to those over the last SIXTY years] are now [BTW this morning] at their absolute historical lows? Come on skeptical – humor me with you affirmative prediction and then let’s sit back and wait for August 2 to arrive.
smarten
Thanks Guy –
No I’m not asking you change your reporting nor labeling. It’s just that I reall the number of reported listings for many, many months being int the neighborhood of 4,500 or so. Now maybe this figure included condos whereas your current figures do not. But to me a four month SFR absorption rate [especially in a market like this where there are so many distress sales] seems incredibly low. Stated differently, I would expect every Tom, Dick and Harry seller to be coming out of the woodwork and listing his/her home for sale. If they don’t and the absorption rate continues to fall, IMO you’re going to see a marked INCREASE [that’s right skeptical] in sales prices.
I’m pleased you’ve started to track the # of active listings/pendings because now we’re going to be able to see if this happens before our very eyes. Thank you Guy.
Guy Johnson
Thanks, Smarten. You are welcome.
Yes, there was a time when the number of listings consistently numbered in the 4K range. I can’t recall off the top of my head if that number included Pendings as well, but it *did* include condos.
At any rate, for clarification purposes, the numbers in the table above do not include condos, town homes, manufactured, or modular. Just for kicks, if I pull *all* current residential listings for MLS Area #100 (Reno-Sparks, NV), including Pendings AND Actives, I get a total of 4,415 listings. This total breaks out as follows:
3,588 – site/stick built
641 – condo/townhouse
186 – manufactured/modular
E.Edward
OH MY…..
There goes that newly acquired home down payment,
All that fed propping-up achieved was getting more people into dept!
Wait till rates go up……
Enjoy the Melt-Down!
smarten
Interesting Guy –
So for all those months when I recall the number of listings totaling 4,500 or so, in actually, the number was skewed because it included NON-active pendings? Interesting.
This subject makes me think back to Silicon Valley in 2005 or so. I remember when monthly listings for this multi-million population center dropped to 800 or so and in my little Saratoga [a city of about 35K persons], to about 75. It became an absolute feeding frenzy with multiple offers and properties selling for substantially above their listing prices. In no way am I suggesting that this is about to happen to Reno/Sparks, but I firmly believe that the number of active listings [just like actual unit sales] can be a big, big pre-cursor of future sales prices. I thank you again Guy for allowing us to track this number.
Sully
smarthen, that last statement about number of active listings is a bit generic. As long as the unempoyment rate is high and the disconnect between median income and house prices exist (400K and over range) then listings are a moot point. i.e. in 2000 houses selling new for 300K are now as low as 449K but still range up to 600K. These houses are still at a frothy level.
The expected buyer in this range would be your professionals and small business owners. The reports I’m getting around here say small business is still in a bind and most self employed are not looking at high end housing. Listings would expect to decrease in an area that sales are not expected anytime soon.
However, in the general market range (350K and under) in which the vast majority of residents are apt to buy, then yes short supply will cause a price increase or bidding wars. This is probably more likely the closer one is to the median as it would be the higher end of this market range.
KingBud
I think anyone looking at the data objectively would conclude that median sales prices and even sales volume are stable on a year-over-year basis. It’s really a factual statement based on the numbers, not an opinion.
The stability is even clearer when you consider the price declines from 2006-2009.
At the risk of sounding like a “permabear” I’m going to suggest that there is no fundamental law requiring that periods of sales price stability MUST be followed by increases in prices. We can have a downturn (2006-2009), followed by price stability (2009-2010), followed by additional price declines (2011- ??).
I don’t think low mortgage rates are going to result in home price appreciation. We’ve had low mortgage rates since the beginning of the economic crisis, and home prices went down anyway. We have had preferential tax treatment for short sellers (no tax for imputed income resulting from short sales) and home prices went down anyway. We’ve had a de-facto partial moratoria on foreclosures (Washington and banks in quid-pro-quo, less aggressive foreclosing by banks in return for TARP and other preferential regulatory treatment) and home prices have gone down anyway.
And we still have the headwinds of shadow foreclosure inventory and high unemployment which both put negative pressure on home prices.
For the sake of those on the blog who own homes in Washoe County, I hope I’m wrong but I’m still comfortable with my 150K prediction for median sales price by the end of the year.
smarten
Thanks KingBud –
You DON’T have to be a permabear “to suggest that there is no fundamental law requiring that periods of sales price stability MUST be followed by increases in prices.” I’ve said the very same thing and yet have been labeled a permabull.
FWIW, let me remind you that my guess as to the end of the year’s SFR median sales price was $172K. I too hope your $150K prediction is wrong.
Catherine
Ouch.
MikeZ
[KingBud] “I’m still comfortable with my 150K prediction for median sales price by the end of the year.”
Not a chance.
And, yes, you can quote me.
inclinejj
OUR RESEARCH REVEALS: Roughly 98% of all loans originated in the first quarter were purchased by Fannie, Freddie and Ginnie Mae. Although some members of Congress would like to terminate the triplets, it would be impossible until the private sector begins to lend again and that is at least three years away, says one blogger
http://nationalmortgagenews.com/columns/hearing/
billddrummer
I’m feeling less comfortable about my $187,000 December 2010 prediction.
There are only 7 months left in the year to pull the median up by $12,000.
I refuse to concede until I know I have been vanquished, however.
SmartMoney
With a historical appreciation rate of 3% per year, there is certainly no rush to buy. God forbid you miss that 3% appreciation between now and next year. That is, of course, if we actually have reached bottom.
shhhhhhhhhhhhh
SmartMoney, careful there, partner. You get screamed at around these parts when you intimate we might not have reached bottom yet.
Ought best keep those thoughts to yerself.
Just a thought….
MikeZ
Hey, SmartMoney, how’s that $140K call looking?
https://renorealtyblog.wpengine.com/2010/01/readers-predictions-for-december-2010%E2%80%99s-median.html
Readers predictions for December 2010’s median SmartMoney $140,000
Sully
RE: the year predictions. I was fiddling around with the Washoe County sales data for May. The 350K and under market had a median of 150K. This was 84% of all sales for May. As long as the high end sells something the median will stay up there. The prediction was for Dec/10, six months from now. A lot can happen in six months…..
MikeZ
[Sully] “I was fiddling around with the Washoe County sales data for May. The 350K and under market had a median of 150K.”
Ok, keep going … explain … what inferences are you drawing from that?
[Sully] As long as the high end sells something the median will stay up there.
“The high end?!” HIGH END?! Are you kidding us? Assuming that you understand the meaning of the median value of a data set, your “high end” is the market over $175K.
smarten
Sully said “The 350K and under market had a median of 150K. This was 84% of all sales for May.”
With all due respect, this doesn’t make sense Sully. By definition the median sales price is the point where half of all sales are below and half are above the median sales price. This means that 84% of all sales for May could NOT have been at/under $150K. Did you mean that 84% of all sales were at/under $350K? And if so, what’s your point? Many on this blog would tell you that the $300K and above strata[s] of the market represent “the high end.”
Sully
Yes I meant that sales at 350K and under were 84% of total SFR sales in Washoe County. I wasn’t making a statement, just a comment regarding the majority of sales in that range. The median for this range of sales was 150K, using the formula for median in Excel. Are you thinking the median should be 175K ? Maybe MS should re-think its formula then!
PriceItRight
Is someone not getting their basic statistics right here? Sully, it is no surprise that when you sort the prices in ascending order and look at only the first 84% data, then the Median price will be a lower figure than the Median for the whole data-set. It’s not a finding, It’s inevitable, unless the distribution is a Dirac Delta (meaning that all 400+ houses sold for exactly the same amount). All your analysis does is that it tells the readers that 8% of houses sold between $150K and $175K…not an important or surprising figure in my view.
If you really want to test the sensitivity of market w.r.t price decline in higher strata, or to analyze the data-set exclusive of outliers, then Mean is a better metric to look at than Median.
A basic example: Consider a set of six houses that sell in a certain month for $100K, $125K, $150K, $200K, $300K, and $400K respectively. The Median for this data-set is $175K and Mean is $212.5K. Now lets look six months ahead and tweak the property value according to the assumption that lower end of the market has stabilized and upper end is experiencing price decline. To make it simple, lets say the price stay unchanged in the sub-$200K category, experiences a 5% decline in the $200K-$350K category, and experiences an average of 10% decline in the $350K+ category. If all the six houses were to be resold in the market, the new prices will be $100K, $125K, 150K, $200K, $285K, and $360K respectively. The new Median is still $175K whereas the Mean drops to $203.3K. Of course this is a simplistic example and numbers can be played with. In reality, the distribution is likely to be clustered around the Median and a price decline is upper strata will also be reflected in the Median value (albeit in a less significant way than in the Mean value). The point however I want to make is to be aware of limitations when making statements related to the Median value.
NB: I for one don’t think that upper end of the market (lower threshold of zone of reduced activity) starts at $350K. I have seen many appropriately priced house in sub-$450K category turning from active to pending in few weeks. Probably well priced properties in Reno are generating good amount of interest if downpayment of ~ 10% brings the loan amount below the conforming limit.
Sully
Price, I wasn’t trying to change any data. Previous discussions have brought up the point that the average buyer in this area is under 300K, I had figured 350K, hence the cut off.
When almost 85% of your market is buying in a certain range, then thats where the action is! Over that range and the buyer, most likely, doesn’t care about median or price per sq ft. I’m not saying there is NO market above 350K, and yes I have found some prices in the 450K range that seem reasonable for the location. Then again, 85% of the people aren’t buying in that area.
smarten
PIR –
Never before had I heard of a “mean” data set for residential real property sales before your post. Just for giggles, I compared your example for the “six houses that sell in a certain month for $100K, $125K, $150K, $200K, $300K, and $400K respectively” to the average sales price. Turns out that mean is just another way of saying “average;” they’re identical and IMO, a terrible way to describe the market [so I disagree with your observation that “if you really want to test the sensitivity of market…mean is a better metric”]. Let me give you an example:
Consider that six houses sell in a certain month for $100K, $125K, $150K, $200K, $550K, and $1.1M [Montreux], respectively. Although the median sales price remains at $175K, look what has happened to the mean or average sales price; it’s now nearly $371K! We actually saw this in Incline Village a couple of years ago when there was a $32M as well as $7.5M sale[s] which skewed the numbers. And that’s the point; a couple of isolated, unusually high, non-demonstrative sales and the entire index becomes skewed [just what the realtors are looking for (Guy of course excluded)]. The median sales price on the other hand ignores aberrations such as these at both ends of the sales spectrum.
I’m not saying the median sales price is the ideal barometer but compared to average sales price, it’s a whole lot better!
IMO if you want to see what’s happening in your particular market strata of choice, concentrate on that particular strata. Keep track of the median sales price and price/sq. foot within that strata, and then look what you can actually purchase for that particular median sales price. You’ll very quickly understand whether the homes within that price strata are going up or down in value.
And this could all be taking place while the median sales price for the market as a whole remains flat [which is exactly what we’re currently seeing]. That’s why we keep hearing on this blog that the market hasn’t bottomed because asking prices/unit sales at the higher end of the market still have a long, long way to fall/increase. IMO these posters don’t understand that they’re NOT looking at the market as a whole but rather, concentrating on a particular strata within that market.
PriceItRight
I totally concur with you Samrten. Mean (Average) of a distribution is highly sensitive to the nature of its tailing, whereas Median is less sensitive to the tail of a distribution but more sensitive to the central data-block.
I think in a hurry to post your rebuttal you didn’t read my post carefully enough. Never did I propose to use the Mean to analyze the central (average) tendency of the market. Median is a much better metric for that. What I did say is that variations in upper strata of the market or changes in the outliers of a distribution are better captured in the computation of Mean than Median. This is exactly what you have proven by your example. A price swing (either -ve or +ve) in top 10% of sold houses will barely change the Median but will alter the Mean significantly. So if Median stays constant for a continuous set of months but Mean changes then something can be said about variations within price spectrum of the market. In other words, Mean is not a replacement for Median, but is rather a complementary tool to analyze the data set (particularly when dramatic variations are being suspected in upper strata of market). Mean is used by statistical community to scientifically evaluate many other natural and engineered systems, but it should NEVER be used as the first choice to analyze real estate data.
My previous post was intended as an example to those contributors (e.g., Sully) who have argued that Median will slide to a newer low by the end of the year (although most of them acknowledge that prices are stable in sub-$200K market). This viewpoint is contradictory to the definition of Median unless activity in the lower strata of market increases at a more rapid rate than activity in middle and upper strata. This was the assumption in my June 1st post when I wrongly used the word predicted (instead of using ‘likely’) to say that Median for May will plunge (again a poor choice of word for ‘drop’) to a new low. I thought that because of flurry in closing to avail the $8K credit, the lower strata of the market will see a disproportionately high activity leading to change in shape of distribution in May. I was proven partially correct as the combined (houses and condos) Median set to a new low of $159.2K (slightly lower than January’s $159.4K). In hindsight, I should have spent few more minutes carefully drafting my post and not wrote it in a hurry just before leaving for lunch!
smarten
Thanks for the clarification PIR –
I too am guilty of too hastily posting comments and should have read yours a bit closer [as you’ve pointed out].
But remember that the mean can skew market sales pricing at both ends of the spectrum although for purposes of this blog, too many tend to concentrate on its upper strata.
Nice having your more scientific comments. I think you and Sane Economist would have much to discuss over a cup of coffee.
PriceItRight
Smarten,
I knew that you will understand my point. Although I don’t post often, I am a regular reader of this blog and you have consistently demonstrated clarity and courtesy in your posts. BTW, for a large data-set, Mean will be less sensitive to variations in lower strata since lower-end is bounded and upper-end is unbounded.
GreenNV
It’s not 100% perfect since not all May sales have hit the Assessor’s site yet, but should be pretty close. Here are the recorded SFR May sales: http://rereno2.files.wordpress.com/2010/06/copy-of-qisales2010.pdf I sorted the YTD data for May, SFR, and deleted all the froo-froo, then sorted by price. You can do the same by going directly to the Assessor’s site and sorting as you feel fit. I haven’t sorted by year built, so some new construction is slipping through. http://rereno2.files.wordpress.com/2010/06/copy-of-qisales2010.pdf
Anyway, some hard data that you can use in this discussion. Median, average,mean? I’m breaking out my college Statistics text I’m thinking standard deviation?
MikeZ
[Sully] “When almost 85% of your market is buying in a certain range, then thats where the action is!”
IRRELEVANT! Change every sale that you removed, ever sale over $350K, to $175,000.01 and the median is STILL $175K.
Do you see that?
Sully
MikeZ, as usual I have no idea what you are talking about.
Sully
Also, I didn’t change anything. I just cut off at 350K (132 sales out of 166). If you remember the conversation awhile back I suggested that 85% of the area residents had a comfort zone at 350K and under. RI suggested 80% at 300K.
You’re saying to take the other 32 high end sales and turn them into 175K sales. For what purpose?
Sully
BTW, using a 300K cutoff does equal 79% of May sales, with a resulting 147,300 median.
Sully
Ok, I got a truncated list the first time around. With a total of 418 recorded sales I get 163K median with the 350K cutoff which is 85% of sales 355 out of 418.
Using the 300K cutoff its still 80% with a 158,750 median. 333 out of 418
billddrummer
To PIR, sully & smarten–
This is better than my statistics class (which I dropped when I was going through my divorce).
I realize I’m late to the discussion, but is the point of the exercise to demonstrate the effect on the median if you bound the upper end of the range (in this case, $350K)?
The various examples shown here are illustrative of what has been suggested for months–that if you bound the upper end of the range arbitrarily, you will push down the median sale price, if only because sales above the top end of the range (no matter what the number is) will be considered ‘outliers’ and not relevant to the remainder of the data set.
DonC
Bill, I think PIR is just pointing out that if the higher end experiences more of a price decline than the lower end you’ll see that reflected more in the mean or average sales price than in the median sales price.
Not sure exactly what Sully was saying other than the median price of lower priced homes is lower than the median price of all homes sold. Perfectly true of course but it’s a bit like pointing out that the median height of people under six feet tall is shorter than the median height of people under and over six feet tall.
I’m thinking your prediction is going to be high. Usually people in higher end homes are less likely to sell in downturns. They just hold on and wait for the recovery, and, while everyone might want to do that, people in higher end homes usually have more ability to do that. This might be different this time around — and given that the amount by which a mortgage is underwater is a good indicator of a default you can’t dismiss the possibility — but so far it looks like we’ll see the same pattern you normally seen. In this case you just don’t see that much activity at the higher end, the market is dead so to speak, so the median isn’t likely to move upwards.
Sully
DonC, I expected something like that from you. I really don’t care what the median is – period. I’m more concerned where the primary market range is here. I’m not about to buy a high end house that might take infinity to sell to a short list of buyers. The inclusion of median prices was to get a rise out of you, smarthen and MikeZ.
Just exactly what criteria is the median price for buying a house? I’m more interested in how fast the house would sell in event I had to sell. Having a long potential list of buyers would tend to increase the speed of a sale, wouldn’t it?
DonC
Sully says “MikeZ, as usual I have no idea what you are talking about.”
That’s unfortunate because it goes to the heart of what everyone is trying to point out to you. I’ve read and re-read your posts a few times and I honestly don’t understand the point you’re trying to make.
Maybe you should change the sales prices of all the houses which sold for more than $350K in your spreadsheet to $176K and see what happens to your median sales price.
MikeZ
[Sully] “I didn’t change anything. I just cut off at 350K (132 sales out of 166). … I’m more concerned where the primary market range is here.”
You cut off the top 14% … and then you say “I didn’t change anything?!”
Sully, you slay me!
So you’re looking for the “primary market range,” are you? And to that end, you cherry-picked the LOWER 86%, rather than the middle 86% or the upper 86%.
Do you think throwing away the upper 14% was a fair, objective statistical decision?
Maybe this will open your eyes: Instead of cutting off the UPPER 14% of all sales by price, cut off the LOWER 14% by price, leaving the same 86% of all sales by volume.
Now please explain: Why isn’t THAT 86% the “primary market range?”
Do you see your mistake now?
Sully
MikeZ, doing it the way you mentioned makes the range 98K – 375K. That works too.
Sully
Actually refining that same search a tad comes up with a 117 – 390 range. Still looks good.
LikeBigBottoms
Most certainly we have arrived, at bottom:
http://www.ritholtz.com/blog/2010/06/personal-bankruptcy-in-america/
DonC
Sully says “I’m more interested in how fast the house would sell in event I had to sell. Having a long potential list of buyers would tend to increase the speed of a sale, wouldn’t it?”
Not really, which is the point PIR was making. If it’s priced right then you’ll have a buyer. If not then you won’t. It’s more about pricing of the particular house than what price band the house is in. It’s not necessarily an advantage to be selling a house in the lower price range. You may have more buyers at lower price points but you also have more sellers.
In this regard, slow sales of higher end homes may not be due so much to a lack of buyers as it is to sticky downwards prices. Prices don’t have to drop into the low end BTW. IOW a house that sold for $1M in 2006 doesn’t have to be priced at $150K in order to sell, but it may need to be priced at $600K. (Way above median but well below the market high).
This is a standard pattern. In fact I’m seeing this where I live. So far in my area in 2010 a grand total of three homes have come on the market. All have sold. (FWIW a median of $844K). A few years ago you would have seen three sales a month — at higher prices. Basically people aren’t willing to sell because they don’t want to “recognize” a loss, and they can afford to do that. What you end up with is the person who needs to sell for some reason. Of the three sales, two I know about. One was an older guy who had to go into a nursing home and one was a couple who divorced.
On the other side, buyers aren’t willing to pay the prices of a few years ago because the bloom is off the real estate rose, so to speak.
Technically what is happening is that sellers aren’t willing to drop their prices to market clearing levels, so what you end up with is a very dead market.
Sully
DonC, I agree with that. By looking at the general market range I was not looking at the low end, but how high I could go and still have a snowballs chance of selling fast, if necessary. Buying right now in a range much above 400K would be considered risky IMO. I don’t expect to have to sell, however I have no control over future events. Taking a potential loss isn’t as critical as being able to sell the property quickly. DOM of 312 wouldn’t cut it.