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The median price of homes in the Bay Area have jumped 5% in April. 5% in a month.

Man o man. No wonder nobody can afford to buy a home or move here. I have attached a link for the article for your review.

Fortunately, I have purchased my home and can afford the payments, but, for investment property, I had to go south; way south, to La Quinta, near Palm Springs. There I could purchase a home and get a decent positive cash flow out of it.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/05/22/BU106826.DTL

cat
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No. of Recommendations: 5
The median price of homes in the Bay Area have jumped 5% in April. 5% in a month.

Unfortunately they don't give enough data to judge whether that's just the normal fluctuation of prices, from seasonal changes, or a something significant.
It's great for a headline, a little fluff piece, and some more ad-views, but there is obviously a lack of real meat to the article.

There's a little more to this one:
http://www.siliconvalley.com/mld/siliconvalley/business/columnists/gmsv/4779113.htm

Which leads me to believe 5% in a month is not significant. (If it can drop 3% in one county in a month, while having a 9% increase with a year-ago comparison, 5% change seems like normal fluctuations in the market.) With enough data one could do a statistical analysis of the changes to see whether this is really statistically significant or not. (My bet is on not. I can't see us having 60% year-to-year increases in property values... ;)

Oooh, I came across an even better source of data:

http://www.svresultsteam.com/scc/main.html
http://www.svresultsteam.com/scc/charts/prices.gif
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No. of Recommendations: 7
The headline was written by a reporter without much math sense.

Read just a little farther into the article and you find this:
The median price for a Bay Area home climbed from $424,000 in April 2002 to $444,000 last month, according to DataQuick, a real estate research firm. Including condos, the median climbed 6 percent, from $402,000 to $426,000.

So that the 5% increase is the annual increasse in prices for the 12 months ending in April. Not for the ONE month of April.

And, rather than an alarming statistic - as it is presented in the headline - it actually indicates a real slowdown in price increases. Note the 7% decline in units sold. But also note from the article:

Home prices across the Bay Area leaped 20 percent or more a year in the late 1990s and 2000, fueled by the Internet frenzy. In late 2001 and early 2002, prices plunged as high-tech firms slashed payrolls and closed up shop. Beginning last spring, prices resumed their upward march, aided by plummeting interest rates.

Karevoll acknowledged the possibility of further price corrections in the Bay Area, particularly if the economy remains sluggish and interest rates rise.


Just another case of a newspaper reporter that is mathematically illiterate.

Good Returns
Charley Meng


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