The Desert Sun reported on 12/3/08 that the median price of Coachella Valley homes fell 34% in October to $225,000, a level not seen since February 2003.
They also reported that in October, there were 853 sales of new and resale houses and condos that closed escrow. That’s nearly a 32 percent increase in home sales in a valley that strongly depends on real estate to fuel its economy.
While this is both true and meaningful at some level, some clarification needs to be made. First, what does “median” actually mean? The median sales price is the price at which one half of the homes sold for more and one half of the homes sold for less. In this case we can say that one half of the 853 homes sold (approx. 426 homes) sold for more than $225,000, while one half of the homes sold for less than $225,000.
Another meaningful term is average sales price. What is average sales price? The average sales price is the total amount of all sales prices divided by the number of sales, in this case, 853 homes. The average sales price is currently at about $329,000. It is important to note that the average sales price also dropped by over 30% from the same period last year.
Why such a large difference between the median ($225,000) and average ($329,000) sales prices? What this shows is that while half of the sales were less than $225,000, the other half that was over $225,0000 included a significant number that were well over this price.
In addition, the number of homes and condos sold over the last six months has increased by more than 43% over the same period last year. To put this into perspective, this number is right in line with the number sold each year during the same period of time from 1999 to 2002, which was a normal selling cycle.
What we are trying to do is give you a clearer picture of the real estate market here in the Coachella Valley. Our next blog will include a discussion of how different neighborhoods in our various cities in the desert affect the total numbers reported in the press. For more information, please visit our website at www.StefaniRealty.com.