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June was kind of a weird month for resale home prices, at least as measured by the size-adjusted median price.

The condo median, as the first graph to the right shows, surged by 2.3 percent. But at the same time, the detached home median fell by 2.9 percent. Because there are more sales of detached homes than condos, the volume-weighted aggregate price (the yellow line in the graph) hewed more closely to the former than the latter.

We haven’t gotten such mixed price signals for over a year. What does it all mean? Probably nothing — it is just one month’s worth of data, after all. And the fact is that the price per square foot indicator, which once functioned well enough as a quick-and-dirty preview of what the superior Case-Shiller HPI would tell us, has become increasingly unreliable of late.

Said reliability is judged on how well the size-adjusted median predicts the HPI, which measures same-home sales and is thus comparitively immune to being thrown off by changes in buying patterns.

Unfortunately, the HPI value for a given month doesn’t become available until almost two months later. The size-adjusted median can fill the gap, and it once did a decent job of exactly that.

But ever since the problems developed in the subprime lending business late last year, median-based price measures have been thrown off by the shift in composition away from low-end properties (an excruciatingly long explanation of this phenomenon can be found here). The second graph shows that since the wheels on the subprime bus started to really rattle in November 2006, both the size-adjusted and “plain vanilla” median prices have moved in the opposite direction of the Case-Shiller HPI.

I produce these size-adjusted median price graphs each month because I am easily amused by colored lines, but also because they tell us a little something about what’s going on even if we know they may not be completely accurate. Let’s not take them too seriously, though — at least, not until the median price indicators fall back into line with the Case-Shiller HPI.

— RICH TOSCANO

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