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Hovnanian Enterprises Inc. Message Board

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  • coldwintergas coldwintergas May 17, 2007 9:06 PM Flag

    Daniel Oppenheim from BOA, best

    The San Francisco Chronicle today reported "Bay Area's housing prices buck national trend", but that is just not true. In fact, it's an outright lie, and it make you wonder just how much the realtor advertising money it took to get the Chronicle to spin the headline that way. I think the Chronicle sold its integrity way too cheaply.

    Asking prices have fallen in the Bay Area over the last year, and they are still falling. So how can the Chronicle report something like that and get away with it? The answer lies in the definition of the "median sales price".

    The median sales price is defined as the number in the middle of sales. Half of houses sold for more than the median, and half sold for less. Houses that don't sell are ignored. No sale, no price! So what happens if the lower half of houses just don't sell at all this year? Ah, now the median is just the number in the middle of what used to be the upper half of the market.

    Voila! Prices fall all around you, in fact, they fall for every single house in the Bay Area, but when you just don't sell any houses below, say, $500,000, the median rises. It's like magic, no?

    In fact, we can easily raise the median income of the Bay Area the same way, even if everyone gets poorer! All we have to do is fire everyone who makes less than the old median. If we stop counting them because they have no income (like the housing statistics ignore houses that did not sell) then we could have a $10,000 drop in the income of every person still employed, and yet show that the median rose!

    The sad truth is that the realtors and papers are desperate to get you to sign away your life's earnings in a falling market. Don't do it! It's a horrible time to buy. Patience will be rewarded.

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