Home prices have definitely stabilized, maybe moving up a bit.

This commentary was posted in January but now back by popular demand!

It’s all over the news and internet. Real estate market indices are up.  And as I had mentioned in my most recent commentary just before the holidays, I’m certainly not hearing the peaceful sound of crickets in our local market.  Tons o’ activity – multiple offers with all cash investors and qualified first-time home buyers on most listings.

The median prices are on the upward trend as of 2012.  I’ve been compiling statistics for our local market since 2005.  I prefer using the mean (average) of sold prices in a particular city with consideration given to the number of dwellings sold in a given year.  Everybody else uses the median standard.  So what to do?  I’ve done the research on medians and averages.  I need to talk to somebody, like some kind of mathematical professor of sorts.

I was surfing Tioga Street a few brisk mornings ago with just one other surfer I had never met before.  After sharing a few waves, we introduced ourselves.  Turns out he is a professor of economics at our university with a major in statistics.  Cool.  Just the person I needed to talk to.  Funny thing though, back in the 60’s, surfers were generally a bunch of bums that would rather hang out at the beach.  I know - I was one of them.  Nowadays, surfers are teachers, doctors, lawyers and even real estate agents.

So … we discussed the use of numerical valuation methods as a somewhat accurate measurement of central tendencies.  Not easy actually when one is trying to catch some waves.  Imagine discussing mathematical equations sitting on your board then a set rolls in. “Hey dude, hold that answer while I snake you on this wave”, as I paddle around my highly educated new friend to take priority position so that I can have that choice wave.  It’s dog-eat-dog in the surfing world.

After our watery discussion on averages and medians, I’m now good and have a better understanding.  So … I’m using both!  Check out my spreads for the average and median prices for some Peninsula cities since 2005.

In summary, I won’t say prices are skyrocketing but I will say prices certainly aren’t going down.  Of course, one really needs to look at individual neighborhoods to get a real handle on prices.  I call this the ASS (Area Specific Statistics) of the real estate market.  Sorta like when my doctor told me to drop my pants and bend over. “I gotta check your bottom”, he said.  That is another story but in real estate, you got to check the bottom too.  More on that. Tune in.