About those home prices: median or average as a trend indicator

            A recent newspaper report based on the annual Central Oregon Real Estate Forecast points out that the difference in statistical methods of calculating home price trends can lead to misleading conclusions.

            In a February article the Bend Bulletin headlined that Bend single family home prices for 2017 had reached an all time high average of $466,926. The statistics were reported by ECONorthwest which credited its source as the Multiple Listing Service of Central Oregon database.

            For those close to the real estate market this was not an unecessarily astounding number. But it nevertheless can create confusion among some homebuyers or sellers who may have earlier heard that Bend’s prices were still under $400,000.

            The issue is whether prices are computed as “average” or “median” statistics. Average is common to most anyone who has passed elementary school math. So 2 plus 2 plus 4, plus 8 is 16 divided by 4 yields an average of 4. But the same set of numbers yields a median of 3, meaning that an equal number of these numbers, if you will, is greater than and less than 3.

            Percentage wise, in analyzing larger numbers the divergence of average and median becomes more significant.

Source: Beacon Report for 2017/MLSCO

            In the case of Bend home prices, the gap between the $466,926 average reported by the Bulletin from the forecast and the year-end median of $395,500 calculated for 2017 from a report by Beacon Appriasal was 18% - a dramatic difference.

            Many analysts would prefer median as a more accurate tool, given that a few especially large sale prices, or lower ones as well, can abnormally skew the trendline. And the overall median price for a single year is more meaningful than any individual month.

            In the Beacon Appraisal report, derived from the MLSCO database, the highest monthly median sale price for 2017 was $418,000 in September, but that dropped to $390,000 in November before rising to $395,000 in December.

            In other points made in the ECONorthwest report:

• Although home prices continued to increase each quarter of 2017 the price per square showed only a slight rise.
• New home sales had only “minimal” price premiums over existing homes.
• 24% of Bend sales were for all cash without financing.

Improving Central Oregon snowpack moving into late February

            The last half of February has emerged as a counterpoint to what only a few days before was a winter sputtering into a premature spring.

            Early February 21  the Meissner Noridc trails groomer reported a fresh two inches at the popular cross country skiing area only 20 mintues from downtown Bend. Less than two weeks before the trails were down to bare ground after being open only briefly since December.

            Another 15 minutes up Century Drive Mt. Bachelor reported six inches of light snow overnight and more than two feet for the prevous seven days.

            “We are seeing the best conditions of the season so far with 28 inches in the last week!, staff noted on the ski area’s morning report.

            As posted earlier in this blog, late winter and early spring weeks often bring storms that can improve unusually low snowpack years.

Is winter back for an encore? Thus far it's been a disappointing performance.

            Just when hope was dwindling for a recharge of this winter’s snowpack a strong weather system rolled into the Cascades on Presidents Day, with Mt. Bachelor reporting more than a foot of the fluffy stuff over a 48 hour period.

Freshies at Mt. Bachelor early Presidents Day

            Even down the road halfway back to downtown Bend the trail groomer for Meissner Nordic area was merrily setting new cross country tracks where only a week before there was bare ground.

            With single digit temperatures forecast for the evening and cold expected for much of the week it appeared that mid-February was giving a reprieve for an otherwise lackluster snow season.

Grooming video at Meissner

                        

            Even so, a much warmer than normal winter has the Oregon vineyard industry concerned that vines may begin to produce buds prematurely—raising the risk of a later hard freeze causing damage.

            However, the uptick in high country snow is welcomed by hay ranches and growers who depend on irrigation from the Deschutes River and its tributaries.

            As of Presidents Day the SnoTel instruments maintained by the Natural Resources Conservation Service showed that the basin snow water equivalent had dropped to 28%, down from about 51% on Feb 1. Precipitation was at 78% of normal Feb 19.

            It will likely be a few days before the new snowfall is reflected in the SnoTel instrument readings.