The top headline in the November 16, 2007 Marin Independent Journal "Median Leaps to $978,000" is not only misleading, but it borders on irresponsisble jounalism. The problem lies in the statistics, and how they are misinterpreted by the media and public.
According to the Marin County Assessor, there are 61,500 detached single family homes and 13, 259 condo/townhouses in Marin. This is the "population" used for the statistics. These residences range from one bedroom condos to large estates.
The statistical problem with this population is that it is highly non-homogeneous. Each month, only a very small percentage of these homes sell (200 to 300) and they are the only ones included in the statistics. More important, each month it is a different sub-set of homes that sell, so to compare the median price from one month to another month is absolutely meaningless, the IJ is comparing apples to oranges.
The median price statistic is rising because more high priced homes are selling and fewer lower priced homes are selling. The president of the Marin Association of Realtors pointed this out in the article? Because of this change in the mix, it is incorrect to conclude that home prices in general are rising or are even flat. Unfortunately, most of your readers will misinterpret the statistics...especially with headlines like " Marin Real Estate Prices Climb Again!"
If you look at individual neighborhoods throughout Central and Northern Marin, you will see a mostly downward trend in selling prices with many sellers offering incentives to attract the few serious buyers. Lender foreclosure sales are also starting to have an impact. Lenders are starting to "dump" foreclosed properties to get them off thier books.
The fact that the number of sales is dropping (down 30 percent) is another indicator that supply and demand are out of balance and exposes the meaninglessness of the median price statistic. How can prices be rising if demand is declining? This is basic Economics 101....supply and demand. With the exception of some prime Southern Marin properties, buyers can pick and choose, but mostly they are not buying at all.
If the IJ is going to report the median price home statistic, it would at least be helpful to include a disclaimer in the article that the statistic is completely meaningless for determining price trends.
This editorial was reprinted with permission from it's author, Keith Marsh, who is a certified appraiser in San Anselmo. Keith's phone number at work is: 415-456-9836 and his web site is:
Keith Marsh
