What is the median price anyways? The median is the value which divides the sequence in half, so half the homes which sell, sell for more and conversely the other half sell for less. What would be the problem with using this to broadly represent the change in home values? The real problem is when the higher priced homes start taking dramatically longer to sell! In this situation, even if prices remained the same, but the rate of sales of the higher priced homes slows (which has happened in every market I've reviewed locally) the median price will drop! (more lower priced homes selling in the same time period)
For Cottage Grove from Jan 1 to Nov 19 2008
$200-300k Cumulative Days on Market was 125 days
$300k-$400k its was $237.5 days, nearly twice as long which would really skew the median price down (great time to move up!)
Well how the heck is anyone supposed to figure out what is happening?
I prefer to look at specific locations, styles, sizes and age groups of homes and compare the cost per square foot changes. I don't usually use a cost per square foot to analyze a single home, but in a large enough group, I believe it gives the best indicator as to what that specific market is doing.
For example, a MLS search of Cottage Grove 2 Stories built between 1980 and 1995 with above ground finished square feet of 2000 and 2600 sf
Jan 1 to Nov 19, 2008 the average price per sf is $103.82
2007 is $108.76
2006 is $118.60
2005 is $124.23
2004 is $121.26
2003 is $119.84
2002 is $98.59
as you can see, for this sampling, today's per sf pricing is back to where it was between 2002 and 2003 and roughly 87.5% of its peak in 2005 a drop of 12.5%
Every property is in a unique market and needs to be compared as such!
Watch what you read, if it says median price be careful!