The following graph shows single-family house prices (median and average) vs. sales (red line) for Marin County. Seasonal variation has been eliminated by using the 12-month moving average.
Clearly, sales have been falling. In fact, year-over-year sales are abysmal.How do we account for the fact that median and average prices have increased in a declining sales environment? What is likely happening is that "low end" houses are not selling or are selling at a discount. Some higher end houses have sold. This will cause the median and average prices to increase even though the market as a whole is declining or at best is flat. People who are buying are buying the nicest houses; apparently, just "nice" isn't good enough anymore. Furthermore, since people's buying power has not changed appreciably, people can buy more house for less money. This also has the effect of increasing the median/average price while sales volume falls. We will have to wait for something like increased borrowing costs for the median/average to drop.
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