Median sales price a “horrible indicator”?

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Good morning. We’ve written that median sales price is a crummy way to measure the overall housing market. But it’s been a while, and we saw two good arguments this morning on the topic.

First Dr. Housing Bubble: ‘Higher priced homes are still moving while lower priced homes are stagnant thus skewing the numbers. If a home doesn’t sell, it doesn’t show up in the data. Similar to taking an immensely hard mathematics course where half the class drops out, but those that remain push grades higher.’

Next frequent commenter Cal: ‘Median is a horrible indicator of value, people absolutely don’t understand what it is telling them (because usually there isn’t enough information to give it context). At the minimum you need sales and inventory along with median to understand what is going on.’

Thanks, guys.
Photo Credit: LATimes
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