Charleston home price update
A reader yesterday pointed out that my statistics were wrong. Apparently, he/she read in the Charleston Post and Courier that the median price of homes declined in June by 7.2% on a year over year basis from $215,000 in June of 2007 to $207,250 in June of 2008.
The post my reader was questioning however was for the month of May when the median price actually increased 2.57% from $205,473 in May of 2007 to $210,747 in May of 2008.
Let me make a point about median prices. While they seem to be the most popular measure for analyzing housing prices, they are inherently flawed. You can't buy a median priced home, it is simply the middle number of all Charleston home sales. On a simpler basis, take a look at the following series of numbers.
1, 2, 5, 100, 1000. The median is 5.
1, 10, 100, 110, 1000. The median is 100.
It makes a big difference. Now of course, when you are talking about almost 1000 sales per month, you aren't going to have statistical differences as great as the simplified numbers shown above. But having said that, I have posted year over year numbers on this blog and they go up one month and down the next. It has more to do with the mix of homes that sold in any particular month.
Just take a look at May and June from 07 to 08. I was not suggesting that the Charleston real estate market was booming in May nor would I suggest because there was a median price decline in June that Charleston home prices are crashing.
The median price has to do with what is selling and lower priced properties are moving much more quickly than higher priced properties. When that happens, the median price statistics will have to be lower. For that reason, while I report the median price on a year over year basis, I also present the average price as well as a 12 month average and median price comparing the current 12 month period with the previous 12 month period.
Bottom line, the real estate market is tough here in Charleston but not quite as bad in Charleston as in many other markets around the country. Think about supply and demand. Inventory remains high and there are fewer sales. The result is that there has to be pressure on prices.