Evaluating the Accuracy of Predictions

I came across this December 2006 article in Business Week that forecasted the 2007 real estate market. Washington, DC, was predicted to have a median price drop of 4.8%.

It got me wondering how accurate last year's predictions were. It's a turbulent market, still coming off one of the biggest runups in history. Of course the year's not over yet, but I pulled some stats from MRIS to get a baseline, and extracted data from the MLS sales to find the year-to-date median. Here's what I found:

Washington, DC, median sales price

2005 Median - $422,000

2006 Median - $410,000 (per MRIS, which represents a 2.84% drop from 2005; Business Week quoted $421K as the median. The article was published prior to year end, so that may account for some of the difference. Since BW didn't have 2005 or 2007 actuals included, I opted for the consistent data source for purposes of this post.)

2007 Median YTD (drum roll please) - $410,000! A change of, well, nothing.

So for everyone that decided to sit out the DC market in 2007--was it worth it? Maybe so, maybe not so much, depending on the neighborhood in which you were looking, and depending on what happens next year, of course (see my post: 2008 Regional Outlook). I'm not advocating that everyone run out and buy, but I don't want to give the blanket advice that everyone should wait either (see my post: When will the market turn around?) The general guidance still applies: look at renting as an alternative, look at the stability of your situation, and look at your lifestyle preference.

This particular stat, of course, is an example of something more positive than expected--I'm sure there are many others were it's worse than expected. Does anyone have any other projections vs actuals (let's leave out NAR projections, which many, many posts in blogs have already pointed out are overly optimistic)? Please feel free to post them here in the comments. I find it's pretty difficult to find older predictions (at least online--they tend to get lost in the shuffle with the newer postings and articles.) As the year winds to a close, it will be very interesting to see just how accurate they were, and maybe give an indication of how much stock we should put into the next round of projections.