Today’s Seattle PI reported that Seattle housing prices rose despite holidays and snow.  But in reading the article, the bias of the Northwest Multiple Listing Service that compiled the numbers becomes obvious. The article states that:

The median price for a Seattle area house that sold in December was $436,750, up just over 5 percent from November…The median house price in King county was $403,500, up just over 2 percent from November…The median condo price in Seattle was $321,500, the highest since March, up 6 percent from November.

You can’t blame them for trying to selectively display the numbers to their liking.  But in reality, those median and average numbers mean nothing because they are not based on repeat sales.  In fact, they don’t even attempt to correlate the numbers based on any objective measurement such as neighborhood or square footage.  The reported numbers from NWMLS mean only that the few people who actually purchased real estate in December did so at a slightly higher average price than in November.  The most likely explanation of the increase in average and median sale prices is that those price increases correspond to an even bigger increase in square footage.

When the more objective December Case Shiller numbers come out in March, it will be clear that real estate in Seattle and all of King County continued their decline in December.  From the Standare and Poore’s Case ShillerFAQ:

The indices are calculated with the repeat sales method, which uses data on properties that have sold at least twice, in order to capture the true appreciated value of constant-quality homes.

To calculate the indices, data are collected on transactions of all residential properties during the months in question.  The main variable used for index calculation is the price change between two arms-length sales of the same single-family home or condo. Home price data are gathered after that information becomes  publicly available at local recording offices across the country.

Data are collected on sales of specific single-family homes or condos. Each sale price is considered a data point. When a specific home is resold, months or years later, the new sale price is matched to the first price creating a sale pair.  The difference in the value of this sale pair is measured and recorded. The sale
is screened to exclude transactions that would make the index not representative of the market, for example a sale between family members (see Question 7, below). The screened sales pairs are then weighted to control for atypical changes in particular homes. All the qualified, weighted sale pairs in the MSA are aggregated into the corresponding MSA’s index.