A question about prices (Updated)

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Update: Please see postcript at the bottom of this post; We believe we have an answer to our question.

Help us out on this one. As our third-grade teacher would say, you’ll need to put on your thinking cap. We want your help interpreting some surprising -- surprising to us, anyway -- data about the decline in listing prices in Los Angeles.

We’ll start with our surprise and then work backwards: it appears listing prices are falling much more rapidly on higher-priced homes. If this is accurate, it runs contrary to conventional wisdom right now, which is that prices are holding up in the $700,000-and-above price range, but falling for less expensive houses.

Now the stats, from Housing Tracker, which tracks MLS listing prices. These prices are for the city of Los Angeles, a smaller sample than the metro LA number we usually quote:
Date 25th percentile 50th percentile (median) 75th percentile
8/05 $475,000 $650,000 $999,000
8/07 $450,000 $559,000 $789,000
Decline 5% 14% 21%

Discussion: It appears to us listing price declines have been steepest in the most expensive houses. Is there something we fail to understand about the statistics? Does this mean that sales prices in those higher price ranges also reflect declining values? And how does this relate to the stability of median sales prices? Median sales prices are holding up because expensive houses are selling better, even though they are declining in value? What’s going on here? Give us your best analysis.

Update: We’re inclined to believe Cal’s comment answers our question, and that our original thought -- that perhaps listing prices of expensive properties are falling -- is wrong, or at the very least, misguided. Cal explains that the explanation is probably ‘compositional’ -- that is, the composition of the supply of houses for sale changes in a way that influences prices by percentile. Likely explanation: the flood of lower-priced homes onto the market has the effect of lowering the 75th percentile price, giving the impression -- probably wrong -- that the top end of the market is weakening.

Photo Credit: Reuters