By ROBIN CHRISTENSEN
In your Oct. 10 article on the recent economic development summit, we noted that the “average cost of an entry-level, market-rate home in the Wood River Valley” was reported to be $615,606; subsequently the description of this number was corrected in your Oct. 15 issue to be the “average of all residential sales.”
The Sun Valley Board of Realtors collects and analyzes all current real estate statistics in Blaine County and we are writing to say that this number is extremely misleading for those seeking to understand our real estate market and certainly does not represent the entry-level cost of a home in Blaine County. Given the crucial relationship to job retention and creation that the cost of housing has, we believe that this correction and, more importantly, a clarification of actual housing market characteristics, need broader visibility.
There are many reasons to accurately report market conditions, with one of the most important being so that residents, public service entities such as schools, emergency services and the hospital and businesses know the true cost of housing as it relates to their ability to locate in Blaine County, especially so for those that are considering moving here. Nationally, on a statewide basis, and locally, the average cost of homes should never be used to describe general market conditions because as a calculation it can be skewed by a relatively few values at the very high or very low end of the data. This makes the average extremely misleading to readers who interpret it as the number that represents roughly what homes cost, especially here in Blaine County where the average home price calculation is drastically impacted by the sale of the relatively few multi-million dollar homes that change hands every year.
The statistic that is universally accepted and utilized by virtually all housing organizations in the country when describing market conditions is the median home price because it is not skewed in any way by outlier values; it is the value that should be utilized when describing real estate conditions for any area, from your local neighborhood to the entire nation. The median is the home cost that is the exact middle of the data set, in other words half of the homes that sold in the period in question were more expensive and half were less expensive, so a reader of this statistic can know with certainty the likely cost to own a home.
Why is it so important to make sure that everyone, including those who attended the summit from outside Blaine County, understands the difference between the median and the reported $615,606 average? Because of the 443 single-family and condominium home transactions in the past 12 months for all of Blaine County the median cost is actually only $330,000, a number that is $286,000 and 46 percent less than the price originally represented as the average cost of an “entry-level home.” Furthermore, if the data search was narrowed to include just three-bedroom, two-bath homes of between 1,000 and 2,000 square feet in Hailey, perhaps a better set of characteristics for an entry-level home in our valley, the resulting median price for the past 12 months based on 37 home transactions with these characteristics is $219,000, 64 percent less than the average price reported in the article. Any individual or company investigating Blaine County from a housing cost perspective would have a greatly improved perception of the affordability of our housing market if it realized that half of the entry-level homes recently sold in our largest city were actually almost $400,000 less expensive than it might have believed if the now widely reported average price was its only frame of reference.
Blaine County residents and businesses, and those considering moving here, need to know the statistics that accurately reflect home costs so that they can make informed decisions about relocating to or from our beautiful county. Statistics that are used to specifically highlight a potentially misleading characteristic should not be part of the discussion. Economic development in rural areas like ours is difficult enough already without confusing the public about true conditions.
Robin Christensen is the president of the Sun Valley Board of Realtors.