Why Home Prices Can Rise and Fall at the Same Time
Scott P. Rogers
At first glance, some of the recent housing market numbers for Harrisonburg and Rockingham County seem a bit contradictory.
Looking at all residential home sales combined (detached + attached), the median sales price has dipped slightly over the past year.
But if we break the market into its two main segments, something interesting appears:
The key lies in the proportion of detached vs. attached homes that are selling.
Last year:
This Confusing Concept Has A Name?
One astute reader and statistician even informed me that there is a name for this!?!
This statistical effect is called Simpson's Paradox, where trends within separate groups can appear different from -- or even the opposite of -- the trend when the data is combined.
In our local housing market, it shows up like this:
What Does This Mean For You?
If you own a detached home, the recent data suggests values are still trending upward.
If you own an attached home, values are also continuing to rise.
And if you are looking at the overall median price, remember that it reflects the mix of homes selling, not just price movement within each category.
As always, understanding the context behind the numbers is just as important as the numbers themselves.
Looking at all residential home sales combined (detached + attached), the median sales price has dipped slightly over the past year.
But if we break the market into its two main segments, something interesting appears:
- Detached home prices are still rising
- Attached home prices are also rising
The key lies in the proportion of detached vs. attached homes that are selling.
Last year:
- 62% of home sales were detached homes
- 38% were attached homes
- 50% of home sales are detached homes
- 50% are attached homes
This Confusing Concept Has A Name?
One astute reader and statistician even informed me that there is a name for this!?!
This statistical effect is called Simpson's Paradox, where trends within separate groups can appear different from -- or even the opposite of -- the trend when the data is combined.
In our local housing market, it shows up like this:
- Detached home prices = rising
- Attached home prices = rising
- Combined (detached + attached) home prices = slightly down
What Does This Mean For You?
If you own a detached home, the recent data suggests values are still trending upward.
If you own an attached home, values are also continuing to rise.
And if you are looking at the overall median price, remember that it reflects the mix of homes selling, not just price movement within each category.
As always, understanding the context behind the numbers is just as important as the numbers themselves.
