In my previous three columns, I demonstrated that:

1. “Price per square foot” was an imprecise estimator of property value in Wilton Manors

2. Statistical analysis found a better estimator using several inputs including square footage

3. Compared to commonly-used metrics, the new model produced superior results

Additionally, we are able to utilize the model to analyze true overall pricing trends in the Island City. 

First, actual sales back to 2012 identify characteristics of the “typical” WilMa home sold:

Three bedrooms, two baths

No garage

Has pool, but not on a river or canal

Just under 1,800 “adjusted square feet” of living space

8,300-square foot lot

Now, we know the characteristics of homes sold in a particular quarter. To the extent the homes sold differ from that typical home, we are able to use the dollar weights for these and other factors to make an “apples to apples” comparison across timeframes.

For example, suppose the median sale price increased by five percent compared with a prior period. Further analysis indicated that in the prior period, the typical home sold was 1,600 square feet (i.e., smaller) and did not have a pool (an attractive amenity for WilMa buyers). We could then hypothesize that the lower price was not entirely due to underlying economics, but to some degree based on different characteristics of the home sold. 

With the weights the statistical analysis found, we are able to adjust prices over time to “true up” valuations and obtain an estimate of actual price activity.

For the three months ended June 30, 2019, the median sale price of a single family home in Wilton Manors per MLS (no condos or townhomes included) was $507,500. This is a 13 percent increase from the second quarter of 2018, when the median sale price was $447,750.

Compared with the first quarter of 2019, median sale price increased by 8 percent.

For the first six months of 2019, the median sale price was $488,750, an 8 percent increase compared with the same period in the prior year.

Now we get to the fun part. The chart included here has a blue line showing actual median sale price per MLS back to 2012. Then I calculated “adjusted median price” based on differences across periods in the characteristics of the homes sold — the dashed red line. Although they track similarly, there are obvious differences in certain quarters.

On this adjusted basis, the median sale price in 2Q19 was $511,120, a slight increase from the actual median of $507,500. However, due to differing characteristics of the homes sold, this was just a 6 percent increase over second quarter 2018, when the adjusted median price increased from $447,750 to $482,800.

Perhaps an analytically motivated and somewhat geekish person could apply this methodology to other cities and neighborhoods, especially as concern grows regarding trends in the marketplace.

James Oaksun, Florida's Real Estate Geek(SM), is Broker-Owner of New Realty Concepts in Fort Lauderdale. In addition to having degrees from Dartmouth and Cornell, he is a Graduate of the Realtor Institute (GRI).