Toddsterpatriot - Net worth, calculated by subtracting liabilities from assets, had increased 13% in 2003, 9.7% in 2004 and 8.5% in 2005
Posted on 10/26/2006 12:53:25 PM PDT by GodGunsGuts
ESL?
Toddsterpatriot - Net worth, calculated by subtracting liabilities from assets, had increased 13% in 2003, 9.7% in 2004 and 8.5% in 2005
LOL!
You are correct:
"Median" is not the same as "Mean" nor the same as "Mode".
From my (admittedly simple) example, the "median" price of all houses sold in August was $100,000 and the "median" price of all houses sold in September was $105,000.
And the "mode" for all houses sold in August was $100,000 while the "mode" for all houses sold in September was $105,000.
Given the assumptions I presented, neither of these last two statistics is very useful, IMHO.
Nevertheless...
Let's look at two months of assumed sales data in which each house (in an admittedly small sample) has a different selling price to see what can happen to the "Median", in spite of price inflation, if fewer "expensive homes" are sold in "Month 2" than "Month 1".
That pic is funny! I don't care who you are.
You are correct:
"Median" is not the same as "Mean" nor the same as "Mode".
From my (admittedly simple) example, the "median" price of all houses sold in August was $100,000 and the "median" price of all houses sold in September was $105,000.
And the "mode" for all houses sold in August was $100,000 while the "mode" for all houses sold in September was $105,000.
Given the assumptions I presented, neither of these last two statistics is very useful, IMHO.
Nevertheless...
Let's look at two months of assumed sales data in which each house (in an admittedly small sample) has a different selling price to see what can happen to the "Median", in spite of price inflation, if fewer "expensive homes" are sold in "Month 2" than "Month 1".
Owned: Pretty much describes the entire thread.
Actually the median is the preferred measure of central tendency for non-symmetric distributions - which home prices typically are. Average net worth and annual income are also typically non-symetric.
The mode is rarely useful.
I fully agree that many of these stats are misunderstood and misused by reporters. You have to be careful with your sample size, though. I'm not sure how many houses transact in a month, but let's say one-half million. Using your example and saying that transactions went from 11 to 9 would represent a fall of 100,000 homes in a month, which is not an insignificant number. I think we would agree that since so few in the media truly understand these reports, that they get dumbed-down and misinterpreted.
A very large portion of household net worth appreciation is a function of real estate appreciation. Take away real estate appreciation (i.e. bubble pops) and there goes your rosy household net worth numbers.
I don't suppose you have any hard numbers to back up your theory? Something a little more solid than your usual "gold stocks paid better dividends than most other investments for the last five years" canard. Maybe a scribbled graph or a cartoon with angels?
How about you crunch some numbers for a change. Tell us (with a reliable source) what percent of our total household net worth is represented by homeowner equity and then explain why that should scare anyone or why it indicates, in any way, that we're doomed.
I took a look at the FED numbers that Mase provided. Don't you guys bother reading your own links?
I never meant to say household net worth was dropping. But you already know that don't you. The rate of appreciation of household net worth is steadily declining. But then again, you already know that too (but you won't admit it).
Net worth, calculated by subtracting liabilities from assets, had increased 13% in 2003, 9.7% in 2004 and 8.5% in 2005
Yes, it has. Despite ever increasing triple deficits.
But then again, you already know that too (but you won't admit it).
Why wouldn't I admit it, it's the truth. How about proving the "truth" you claimed about real estate?
Feel free to take a look-see at Mase's FED link in post #113. Go to page 110 of the link and see how much of household net worth appreciation is tied to real estate.
Also remember, as the boomers take early retirements, those jobs that normally would go to younger workers here in the USA are being sent overseas. Those who own homes and are in their 40s and early 50s will furher see their homes decrease as there are fewer qualified buyers. We are just seeing the beginning of a dangerous trend of deflation.
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