Did you ever consider this? Average price is simple; add up all the sales prices divide by the number of transactions – voila’; there’s your number. But what really goes into this average price?
Over the years, houses have become larger. The average size of houses has increased. I think this is the first year in my lifetime where the average size of a new house actually dropped. But, beyond that, houses have more STUFF; electronics, garage openers, microwaves, more bathrooms, basements have higher ceilings, closets are bigger, alarms here and there, wood, slate, granite, marble, etc.
Are you still following me? Here we go, have homes appreciated as much as we think they have based on reported average prices, or have houses become larger, more content rich and more functional over time as to give us a perception of appreciation than might actually be occurring from cost rather than market driven forces.
I know this topic is a little esoteric, but the average price of a house in its 1950s version is significantly different than the average price of a house in 1980s trim, and so on. Are we comparing apples to apples – year after year?