Why median prices are misleading
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We’ve been down this road so many times together, but let’s go down again: median prices present a somewhat misleading picture of the market. In the current market, distressed properties
(think Palmdale and Lancaster) are selling, and homes in established neighborhoods (think Santa Monica, as in the photo) are not. Median sales prices are thus skewed toward the distress. By how much?
Here’s an exercise: In Palmdale, population 140,000, MDA DataQuick counted 319 single-family homes sold in September, or one home for every 438 people. In Lancaster, population 143,000, 366 homes sold -- or one home for every 390 people. But in Santa Monica, population 87,000, only 15 homes sold -- one for every 5,800 people.
There are two headlines here: Palmdale and Lancaster have an outsized influence on Los Angeles County median sales prices. They are weighting the overall county numbers toward lower prices and larger price declines (The median price in the county is now 31% below year-ago levels). The second headline is worth noting: the residential real estate market in Santa Monica, one of the larger collections of high-priced homes in Los Angeles, was essentially frozen in September. Frozen. I can’t imagine October will be much different.
--Peter VilesYour thoughts? Comments? E-Mail story tips to Peter Viles.
Photo Credit: Michael McCreary