I was looking at a summary of median housing price trends for San Diego that came through my inbox yesterday and was again reminded how stupid statistics can be. Actually, they can be downright dangerous if you don’t know what you are really looking at.
Of course, I honed in on the I-15 corridor communities, our core area, and specifically on Scripps Ranch, where we make our home. Based on annual median prices alone, one would conclude that everything is coming up roses. In fact, median sale prices were shown as increasing slightly in 2007 as compared to 2005. It’s a great time to buy!
Speaking as one whose feet are literally on the ground in this market, I assure you that 2007 prices did not outperform those of 2005, our peak year. That is, not if you are comparing “like” fruits. Using the data available through our Sandicor Multiple Listing Service, here is what I found:
The MLS data tells us that home prices haven’t changed a bit in the past two years in Scripps Ranch. Woo-hoo! Then, why all the whining about some housing market correction? Well, the median prices per square foot have changed. The median home purchased in 2007 was bigger; buyers are getting more for their money. And, of course, there are far fewer buyers.
This supports what I have been saying all along. Would-be buyers do exist, but they will commit when they perceive value. They are generally spending the same amount on a home, but they expect that home to be a better value than it was in 2005.
As a cautionary note, there are a couple of other things which are messing with even my statistics. First, in 2005 we had new homes flying off the shelf in Scripps, but those were rarely listed in the MLS. The builders didn’t need to do anything but put a few flags and balloons outside the models, and they certainly didn’t need to cooperate with the buyer’s agent. Today, the remaining unsold new home product is among our largest and pricier product, and list them in the MLS they must. Second, the statistics don’t reflect what I know to be true from my daily experiences. Even like-sized homes are not created equal. The homes which are selling at the higher price points today are generally in superior condition to their 2005 counterparts. Buyers expect granite counter tops now; they expect highly-upgraded and absolute turnkey for less than they would have paid for mediocrity two years ago.
Statistics can be enlightening, but just we careful that you know what they are really telling you.