Median Values Should be Abandoned

[ValuMan]

When are Median Values for an area, town, county, State or the country going to be abandoned?

In areas such as my home town, or valley area of 8 resort cities, the sale of 2 or 3 multi-million dollar homes in any of the towns in any given month will play havoc with the city or area Median Values for that given month.

Why can't the values be discussed as broken down into sensible value ranges? May I suggest?

Low Moderate Value to $300,000

High Moderate Value $301,000 to $600,000

Higher Value $601,000 to $1,000,000

Million Moderate $1,000,001 to $3,000,000

Highest Million $3,000,000 and up

The agents love the Median Values when there have been multi-million dollar sales, its good for promoting the moderate homes, but they cry like babies when the high end sales slow and the Median Values drop sharply, making the area "Market" look bad. In actuality, the lower ranges of value might easily have risen over the month before.

Even in my Broker hat - I find the Median Values to be irrelevent to what's actually going down (or up) in the market place.

 

[Lee Lansford]

Both Median Prices and Average Prices are but simple tools that can be used, or, misused.

Raw data in the hands of a fool are quite dangerous.

Data must be interpreted...that's why we have (competent) appraisers.

 

[ValuMan]

Raw data in the hands of a fool are quite dangerous.

Data must be interpreted...that's why we have (competent) appraisers.
__________________
Thank you Lee for that but I still think Median Values are now so mis-used as to be dangerous in the Real Estate Homes Market.

 

[The Warrior Monk]

In areas such as my home town, or valley area of 8 resort cities, the sale of 2 or 3 multi-million dollar homes in any of the towns in any given month will play havoc with the city or area Median Values for that given month.

Actually, it typically plays havoc on average sales price, not median. We've seen some really extreme examples of that out my way.

It takes more than just a few sales to dramatically affect the median price. One example would be activity in one market segment increasing while sales activity in another segment decreasing.

Why can't the values be discussed as broken down into sensible value ranges?

They should be.

 

[Terrel L. Shields]

If I stand with one foot in 170 degree water and one foot in ice water, on average I am comfortable...right?

 

[Elliott]

Well, values are numbers typically developed by appraisers. Median sales
prices tell you something, as do average sales price. Always depends what
your trying to 'advocate.'

I'm not sure I understand what has gotten your goat. I will tell you that
I looked at a typical Palm Desert tract from Zillow, and all the sales prices
were just above $200,000, except when you had golf course frontage.

 

[jay trotta]

IMHO - when you start searching data by statistics / average / median, you have begun the tranistion to bias a report. It is the outside influence that is directing your thought process in a direction you may not normally take in the daily course of business. Your knowledge and experience are being directed elswhere and may create a diversion that has the potential of "influence".

In order to render a totally unbiased report, ones thought process should not be directed away from the basic instinct we all posess in our daily process; it's what creates "independence" and undue influence. Lately in running information for the MC we have found 99% of the time the data is skewed and what I would consider useless. Our shoreline is one of the most difficult to work in, direct waterfront millions; two blocks away 3 hundred thousand; one block away 5 hundred thousand; bascially one needs to know the area. Using an MC on this stuff is misleading and so noted. Demands are made by UW's who have not a clue, to provide the document.

skippy has moved to the UW side of the market.........ROFL

 

[Caterina Platt]

When our data sets are small and varied, statistical compilations are useless, or nearly useless.

I too have a mixed market with little homogeneous information. I have to expand search parameters to include an area of approximately 180 Sq. miles for the MC form to barely scrape together 40 -50 applicable records most days and that's active/pending/sold in total. That's our populated area of the valley. When I get out to the large acreage developments, sorry Ms./Mr. UW, you're getting the old N/A in the MC form because I'm just not trying to dork this thing with a whopping 3 sales. So, yes, I understand what you're talking about.

I explain in the commentary that data sets are small simply due to the nature of the market. Statistical models built upon small, varied data sets will often provide less meaningful and misleading results. Median value ranges swing wildly from one time period to the next if an extreme high or low sale takes place and these are not necessarily reflective of the entire market direction or trends. You get the idea....

It's about the best we can do. Once again, the guidelines, forms, etc. are designed for the norm, and we mixed market folks get to spend a good portion of our time explaining why we're not the 'norm'. Good thing I like being odd.

My rant in respect to the median or predominant value is when the box checkers really think they need a comment as to why the subject home varies more than 20% from the predominant value and 'is it an over improvement?'.

 

[William K]

Both Median Prices and Average Prices are but simple tools that can be used, or, misused.

Raw data in the hands of a fool are quite dangerous.

Data must be interpreted...that's why we have (competent) appraisers.

My Bold

Which is exactly why Fannie, Freddie and the FHA want the 1004MC, and the NAR along with the Govrnmt love reporting the Average and the Median prices in a declining market.