New market analysis changes.

[shrubberyvaluation]

The reason the median price tends to dip from spring into the end of the year is not because values are dipping. The reason it looks like that is because the mix of properties that sell throughout the year is not the same. It is because the properties that sell towards the end of the year are generally inferior to the properties that sell during the spring.

You can't analyze real estate data without understanding that this is the nature of the data.

Oh ok, I guess it depends on how comparable the properties are in your dataset.

 

[shrubberyvaluation]

Plus there’s different time adjustments for different property types, styles, sizes and price levels.

They keep trying to turn something into a science that isn’t a science. They are pounding a square peg into a round hole and creating a mangled fantasy that serves no purpose.

Bingo

 

[Trihard]

Plus there’s different time adjustments for different property types, styles, sizes and price levels.

They keep trying to turn something into a science that isn’t a science. They are pounding a square peg into a round hole and creating a mangled fantasy that serves no purpose.

99% of the time there are not enough comps to time adjust this way if you are trying this through just comps in the neighborhood. I have been finding that if I want to do a time adjustment with ranges. For example 1400 sf to 1800 sf, build between 1940 to 1980 and under 1 acre, I have to go city wide or county wide in order to smooth out all the noise.

 

[alebrewer]

With this seasonal decline in sales, the mix of properties selling is changing which causes the median to dip. You have fewer of the top of the range properties selling in Q4 and Q1. It is not that the properties that sold in Q2 would all sell for less in Q4 and Q1.

But let's say your modeling the behavior of market participants at the 'mid-range'. You wouldn't even have the 'top of the range' properties in your analysis would you? If so, they wouldn't be skewing the data, right?

 

[Joe Flacco]

But let's say your modeling the behavior of market participants at the 'mid-range'. You wouldn't even have the 'top of the range' properties in your analysis would you? If so, they wouldn't be skewing the data, right?

What I observe is that they are just not as good. They fit the criteria for what is comparable but tend to be houses less updated.

Try this. If your median price is $500k in the spring and summer and the median price is $450k in the winter, look up the median properties and you will see that the median property in the winter is inferior to the median property in the spring and summer.

 

[Joe Flacco]

Sir, if possible please provide source info...

This shows the seasonal dip in median price, total seasonal decline in sales, then decline in sales in higher price ranges.

You can see that sales activity above the median price declines more than all price ranges. That is why the median price dips. The seasonal decline in activity is greater above the median price than at or below.

 

[alebrewer]

What I observe is that they are just not as good. They fit the criteria for what is comparable but tend to be houses less updated.

Try this. If your median price is $500k in the spring and summer and the median price is $450k in the winter, look up the median properties and you will see that the median property in the winter is inferior to the median property in the spring and summer.

Fair enough. Define 'inferior' though. You mean smaller? Sold for lower price? Older? Poorer condition? All the above?

 

[Joe Flacco]

Fair enough. Define 'inferior' though. You mean smaller? Sold for lower price? Older? Poorer condition? All the above?

All of the above, could be anything. If looking at a small dataset, the median could even be higher in the winter and if that is the case, most likely it is because the median property is better than in the spring and summer.

What is important to know is that the fewer number of transactions in the winter can skew the median price. A median price based on 30 sales is going to be more reliable than a median price based on 10 sales.

 

[alebrewer]

All of the above, could be anything. If looking at a small dataset, the median could even be higher in the winter and if that is the case, most likely it is because the median property is better than in the spring and summer.

What is important to know is that the fewer number of transactions in the winter can skew the median price. A median price based on 30 sales is going to be more reliable than a median price based on 10 sales.

Ok - so your argument is that folks sell nicer homes in the spring and crappier homes in the winter? That's gonna be a tough argument to quantify, my friend.

 

[ZZGAMAZZ]

Plus there’s different time adjustments for different property types, styles, sizes and price levels.

They keep trying to turn something into a science that isn’t a science. They are pounding a square peg into a round hole and creating a mangled fantasy that serves no purpose.

Hmmmmm...wondering whether the market description as a "mangled fantasy" that must be described in a single checkbox can be included in the SOW, or whether it is protected term that would be flagged by the Review Master ???? LOL