Sandra, your comparison of sales in all of 2006 to all of 2007 is worthless at best to misleading at worst. I certainly hope you provide a better service to your clients then providing this type of information to attempt to show prices are remaining flat or increasing.
The problem with your methodology has nothing to do with the median versus mode differentiation. Your error is that you are taking information for entire twelve month periods and attempting to utilize it to show current price trends. That is you are taking ALL of 2006 and comparing it to ALL of 2007.
But the reality is that the data in the subsets changed during the stated period â€“ prices in the later part of 2007 where different than the earlier part of 2007. Your may have missed it but a dramatic credit event took place in mid-2007 which impacted the market. Your results are further skewed by the reality that sale transaction volume slowed dramatically in the later part of 2007. Therefore, your â€œdataâ€ for 2007 transactions is more heavily weighted towards early 2007 transactions (when prices where higher) to the end of 2007 (when prices where lower). Further compounding your â€œanalysisâ€ is the lag time between a purchase agreement being entered into and a closed sale. Closed sales in February of a year actually more closely reflect the market climate about 6 to 8 weeks earlier.
For these reasons, when analyzing trends, those more statistically trained, would utilize a smaller time period for a comparison. That is, one would compare sales transactions from February â€™07 to February â€™08 to analyze a year over year changes. This methodology is imperfect, as the sales mixture may have changed from the data sets. However, it is much more useful of show trends. The following entities have reviewed data as to price changes â€œyear over yearâ€ for Orange County and all are showing a material price decreases. I also provide their measuring date which are now several months old: Case-Shiller (LA/OC)-13.70% Dec. â€™07; DataQuick -16.30% Feb. 22; First American (LA/OC) -15.43% Dec. â€™07; Global/National City-10.97%4q/2007; CAR -11.60% Jan. â€™08. This is â€œyear over yearâ€, prices are even lower today and from the peak.
Further prices decreases appear almost certain given the number of adults with jobs is declining, the number of home buyers is at historic lows, the number of sellers is more than twice the norm, forecloses and notices of default are at records levels, and credit standards are continue to tighten (pulling even more potential buyers out of the market). Simply stated, the real estate bubble will continue to deflate.