The median price per square foot for resale homes continued its decline last month. As has been the trend over the past six months or so, condos were hit worst, with their size-adjusted median price down 6.4 percent between January and February. The detached home size-adjusted median was down 3.0 percent for the month, and a volume-weighted aggregate of the two property types was down 3.8 percent.

From the September 2005 peak of the series, the size-adjusted median price was down 45.3 percent for single family homes, 54.5 percent for condos, and 48.3 percent in aggregate.

The well-documented shift in buyer preference towards lower-priced homes is causing these numbers to overstate the total price decline. But not by a whole lot. We can try to assess the impact of the shift towards cheaper properties by comparing the size-adjusted median price to the Case-Shiller index, which measures subsequent sales of individual single-family homes and is thus a much more accurate price measure.

The Case-Shiller index was most recently updated for December, at which time it showed a 39.2 percent decline from the peak. Because the index is based on sales taking place in the previous three months (October, November, and December, in this case), the December index number actually best represents November pricing.

Thus, we should compare the December Case-Shiller index reading to the November size-adjusted median price. As of November, the size-adjusted median for single family homes had declined by 41.1 percent from the peak — 1.9 percent more than the Case Shiller index.

So the green line in the accompanying chart does overstate actual detached home price declines, but only to a very small degree in the grand scheme of things.

Since the Case-Shiller index doesn’t measure condo prices the same comparison can’t be performed for that property type. This is too bad, because the substantially larger decline in the size-adjusted condo median leads one to wonder whether there is some greater distortion in the median-based condo price indicators — or whether the condo market has indeed been spanked that much harder.


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