Continuing my earlier rant about how real estate statistics don’t always tell an accurate story, let’s look at what Menlo Park’s numbers seem to indicate for our ongoing robust spring market.
First, a recap: courtesy of our good friends the quant jocks over at Altos Research, we saw that the median price numbers for Menlo Park had dropped by some 30% — from $1.25M to $850K — over the 9 month period from April of 2007 to January 2008.
That drop in median price, however, by no means reflected the reality on the ground in Menlo Park — in other words, it is not true that a home in Menlo Park that was worth $1M in April 2007 was suddenly only worth $700K in January 2008. The reason for that disconnect was simply the change in the mix of properties being offered: in the last half of 2007, the inventory of lower priced homes east of 101 swelled, dramatically pulling down the overall median.
As if to emphasize that disconnect, we see what appears to be a dramatic price recovery from January of 2008 to now in May of 2008; in fact, it looks like the market has regained all 30% of what it ostensibly lost late last year!
Again, the reality on the ground is quite different; that is, a Menlo Park home that was worth $1M in January of 2008 is most emphatically not suddenly worth $1.3M today.
Moral of the story? Simple: real estate statistics are good at telling some stories, but not very good at telling others. In particular, the median often simply reflects the mix of properties currently on the market and not necessarily any underlying ups or downs in the market.
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1 Ray // May 5, 2008 at 5:18 am
Thanks for a nice post. On the ground, it does seem that the high end is basically frozen in menlo park. There are few new houses above $2M, and most of the ones already there have been sitting, despite price cuts. I wonder if the slowdown we keep reading about is finally starting to touch the high end of menlo?
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