http://www.pegasusventures.net/wordpressblog/2009/09/30/measuring-by-the-foot-does-it-make-a-difference/ The Dirt on San Francisco Real Estate - (Broker, Cal. Dept. Real Estate License No. 773349) Wed, 02 Jun 2010 21:13:56 +0000 http://wordpress.org/?v=2.9.2 hourly 1 http://www.pegasusventures.net/wordpressblog/2009/09/30/measuring-by-the-foot-does-it-make-a-difference/comment-page-1/#comment-576 Storm Fri, 06 Nov 2009 03:42:25 +0000 http://www.pegasusventures.net/wordpressblog/?p=521#comment-576 I think normalizing value by price/sqft makes a lot of sense. Homes vary a lot: size, location, curb appeal, etc. So comparisons are difficult. Example: 2 homes at the same price... is that a large house in a bad location? Or a small house in a great location? How do you compare? But, if you normalized by size, then their relative value becomes apparent. It's hard to normalize things like location or curb. But size is definitely a 1st order effect, easily quantifiable, and therefore straightforwardly normalizable. Normalizing the price by size just takes one more variable out. I think it's a very sensible idea. I think normalizing value by price/sqft makes a lot of sense. Homes vary a lot: size, location, curb appeal, etc. So comparisons are difficult. Example: 2 homes at the same price… is that a large house in a bad location? Or a small house in a great location? How do you compare? But, if you normalized by size, then their relative value becomes apparent. It’s hard to normalize things like location or curb. But size is definitely a 1st order effect, easily quantifiable, and therefore straightforwardly normalizable. Normalizing the price by size just takes one more variable out. I think it’s a very sensible idea.

]]> http://www.pegasusventures.net/wordpressblog/2009/09/30/measuring-by-the-foot-does-it-make-a-difference/comment-page-1/#comment-545 X-Man Wed, 30 Sep 2009 16:15:40 +0000 http://www.pegasusventures.net/wordpressblog/?p=521#comment-545 Interesting Misha. It would also be interesting to see the percentiles of homes by square footage that were selling during the non correlated periods to see whether your offered explanation that lower end was selling better at the bottom holds true. I think you may have had the reverse in April (because of low inventories and a perception that there were bargains or low inventories?...) In any event it is very interesting. In my view there is a limit on using the price per square foot as a measure. What I mean is I think people buy with a total budget in mind and a range of square feet or rooms, not necessarily a price per square foot. So the total price and price per square foot is always likely to be off by some measure (maybe adjusted by the number of rooms or something like that), I can see 100 ways of cutting this data which could be useful. I think a statistician close to you or you should just run a correlation on the data and it will probably show you are on very solid ground. Interesting Misha. It would also be interesting to see the percentiles of homes by square footage that were selling during the non correlated periods to see whether your offered explanation that lower end was selling better at the bottom holds true. I think you may have had the reverse in April (because of low inventories and a perception that there were bargains or low inventories?…) In any event it is very interesting. In my view there is a limit on using the price per square foot as a measure. What I mean is I think people buy with a total budget in mind and a range of square feet or rooms, not necessarily a price per square foot. So the total price and price per square foot is always likely to be off by some measure (maybe adjusted by the number of rooms or something like that), I can see 100 ways of cutting this data which could be useful. I think a statistician close to you or you should just run a correlation on the data and it will probably show you are on very solid ground.

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