For a nice write up on the pros and cons of different price indices at Calculated Risk. I agree with their explanation and think it applies to the real estate trends and statistics we have seen for El Dorado Hills and Folsom:
"The NAR, DataQuick and other reports use the median house price; they take all the recent sales, and find the median price. This can be distorted by the mix of homes sold. When the bubble first burst, the median price continued to rise because fewer lower end houses were sold (the low end portion of the market with subprime loans slowed first). Now with jumbos being limited, the high end sales volume has fallen, and the median price has fallen quickly."
I especially agree with some of the concluding remarks:
"However I believe prices will fall across the board, and that the subprime market was just the first segment to see price declines."
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It appears that consumerism is alive and well in El Dorado Hills. I'm surprised that the avg purchase price has not fallen as much as the avg cost per square foot.
It looks like instead of taking advantage of the lower price for the same home, the buyers are buying a larger home.
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