Median home price?

If you read The Seattle Times today than most likely you saw the article titled, “Home sales hotter but prices cold.” I just want to clarify something that the author of this article doesn’t understand. The bulk of the content is based on the discovery that median sales prices are down. Median sales price is when half the home sales sold for less and half sold for more.

There is a problem with using median price as the benchmark. As the article noted much of the recent activity can be attributed to the $8,000 tax credit for first-time home buyers. First-time home buyers almost always buy the lower priced homes in the market. As you can already figure out, if all the recent activity is in lower priced homes than the median home price figure would show home prices are down. Home prices may be down but this is not an accurate way to determine if that is the case.

The housing market should be looked at in three sections & not all lumped together. There should be stats for the lower market, middle market, and higher end market. Than you can get a clearer picture of how prices have changed.