Speaking of statistics, last Friday’s (12/21/07) San Jose Mercury ran an interesting article about the state of the housing market in the Bay Area. On the front page section under the headline “November home sales at 20-year low,” the Mercury reported that in Santa Clara County homes sales (new, resales, detached, and condos) for the month of November experienced a 35 percent decline from the previous year. The article, however, stated that despite the decline in number of sales, the median price during the same time period rose 0.7 percent. Not much of an increase in the median price but an increase nonetheless. How can there be an increase in the median price with such a steep dropoff in sales? More high-end homes are selling than the less expensive properties.

This is not completely surprising given the current mortgage crisis. The buyers who can afford the higher priced homes are more likely to have sufficient funds for a deposit to qualify for a home loan. On the other end of the spectrum, first time home buyers and buyers with lower incomes will have a much more difficult time qualifying for a loan today. Thus, reducing the number of lower-priced homes being purchased.