I'm looking at the graph you're asking about. The huge spike they are reporting looks like it's roughly between March-June of 2011. On that graph, the spike shows when "All Properties" are selected. There is also an option to unselect "All Properties" and look at the data for one bedrooms, two bedrooms, three bedrooms, and four bedrooms. Looking at the data for the homes separately by number of bedrooms, there is some movement but no huge spikes. I don't know the methodology or have access to their data tables, but my guess is that it is due to one of two things:
1) The spike may reflect something as simple as a data entry error.
2) The spike may reflect one or more sales of exceptionally expensive properties that skew the data points. Data can look skewed that way if there are some "outlier" properties that are exceptionally expensive, especially when there are few other sales, and in mid-2011 our market was depressed with few sales. The correct way to show such data is to either throw out the outlier properties so they do not disproportionately skew the results, or to use median prices instead of average prices. Averages will add up the total prices of the homes sold, divide by the number of homes sold to achieve an average price. In the same way the average square footage will be calculated by adding up the square footage of all the homes and dividing by the number of homes. The average price will then be divided by the average square footage. So, if you had 100 homes that sold for around $500,000 the average price would be $500,000. But if you included one home that sold for $15,000,000, that one home would completely skew the average price, giving an inaccurate picture of the real average price of homes.
Reporting median prices would to some extent correct for that bias, because you would be calculating the point at which half the homes sold at a lower price and half the home sold at a higher price.
I think that it's highly likely that one of these two things explains the spike.
Let me know if you have any additional questions!
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