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Average US new home price $237,000?
- Thread starter crgarcia
- Start date
Quote from crgarcia:
Well, it's the median price, not the average, although they are similar.
$237,000?
In a housing bear market?
Worse yet they buy the house to live in, not to rent it.
It seems obvious why there are so many foreclosures. And why many people doesn't have savings, much less investments -real investments, not disguised expenses-.
http://biz.yahoo.com/ap/070726/economy.html?.v=23
70% home ownership rate in the US.
Where are the new buyers coming from? Immigration? It's all but stopped. No new immigrants and most of the Mexicans are going to be deported. Who are the new buyers? It's a handful of overseas speculators banking on a falling USD to cushion any loss in asset depreciation. US resident speculators are walking away from obligations. better to ruin the credit and not pay the mortgage on the 5 empty houses they each bought than to live on the street.
The only factor that will save the US real estate market is to inflate the currency and make sure crude prices stay high and stays pegged to the USD. This ameliorates domestic inflation by spreading the pain to other economies. Otherwise the great depression will look like a walk in the park.
Quote from RoughTrader:
They are NOT similar
The median of 100 homes sold for $100k and 1 home sold for $1 million is $550k.
The average of 100 homes sold for $100k and 1 home sold for $1 million is
( 100 x $100k + 1 x $1 million) / 101 = $108.9k
The median is a dirty little method the industry uses to mask the larger volume of declining home prices with the fewer transactions of higher-end homes.
RoughTrader
What are you talking about. The Median is 100k.
Quote from deviltrader:
1) The original statistic of this thread was for the NATIONAL median, it wasn't for the median in Palo alto. You said the median and average are not the same, now you are talking about local markets? huh? Are you intentionally trying to change the subject?
2) You should review a statistics book before you stubbornly continue with this.
1) Yes, my math appears to be rusty, it was a good review. When I'm in error, I'll never hesitate to admit it.
2) Your hostile and bitter tone speaks volumes about how such a non-issue would irk you even in the slightest way. I don't know you, I don't care to, but you take the trouble to voice your hostility openly.
3) I was never commenting on your reference to national housing statistics. My concern was with the use of median vs. average for reporting housing prices. The truth invariably remains that all housing markets are local, and national numbers are meaningless for buyers and sellers.
4) My original intent was to show how median price reports are not indicative of the behavior of markets. This site does a correct job of explaining what I had erroneously argued:
http://www.longislandbubble.com/numbersgame.html
RoughTrader
Quote from The Kin2:
What are you talking about. The Median is 100k.
Yes, I understand, as others have already pointed out. My calculation was incorrect and my example not very good. Again, I refer you to this site for a better explanation of the concept I was trying to illustrate: http://www.longislandbubble.com/numbersgame.html
RoughTrader
Median is 100k. But, what is surprising is that only a few here caught it?
Deviltrader, congrats the catch, but the median and mean should only converge on a "Normal" or "Gaussian" population distribution. I doubt the "Price" of home sales falls into a normal distribution. For a normal distribution, if the Mean is approx $237k, and there was a home purchase of $1M, there would need to be a theoretical home purchase at -763k (237k - 1M) to constitute a normal distribution. Take that extreme up to 2M, 3M and a Normal distribution is not possible.
I am guessing a Poisson distribution with a lambda of 1?
http://en.wikipedia.org/wiki/Image:Poisson_distribution_PMF.png
Median and Mean would be drastically different, in fact, reporting a Mean would be statistically useless, maybe this is why they use Median?
Deviltrader, congrats the catch, but the median and mean should only converge on a "Normal" or "Gaussian" population distribution. I doubt the "Price" of home sales falls into a normal distribution. For a normal distribution, if the Mean is approx $237k, and there was a home purchase of $1M, there would need to be a theoretical home purchase at -763k (237k - 1M) to constitute a normal distribution. Take that extreme up to 2M, 3M and a Normal distribution is not possible.
I am guessing a Poisson distribution with a lambda of 1?
http://en.wikipedia.org/wiki/Image:Poisson_distribution_PMF.png
Median and Mean would be drastically different, in fact, reporting a Mean would be statistically useless, maybe this is why they use Median?