Home Value - Price per Square Foot vs Median

One of the most common ways to evaluate the real estate market is by watching the sales price per square foot of homes sold ("sp/sqft"). Let's take a look at the results of homes sold in four local towns for the month of December 2008:

City	Homes Sold	Low SP/SQFT	High SP/SQFT	Average SP/SQFT
Coto de Caza	12	$222	$450	$319
Ladera Ranch	31	$207	$276	$242
Mission Viejo	92	$186	$362	$267
Rancho Santa Margarita	49	$204	$309	$264

For the expanded area including Lake Forest and Modjeska, Silverado and Trabuco Canyons in additon the the four above, the average price per square foot in December was $234 for attached homes (condos & townhomes) and $262 for detached single-family homes. This represents a drop of 20% for condos and 15% for single-family homes from January's average - a significant reduction, but not quite as catastrophic as is portrayed in the media. Year-over-year reductions of 25% or even 35% are often quoted, but these are based on changes in the "median" home value. The median is the value at which half the homes sold were less expensive and half were more expensive. Since an extremely high proportion of sales are occuring at the lower end of the market, the median home value is skewed significantly lower than the reduction in sales price per square foot!