The southern California housing market is hot. So hot, that in January 2004, the median home price in Malibu was up 106.7 percent from a year ago. Did Malibu homeowners actually see the price of their homes double in just one year?

Increases and decreases in home prices are usually quoted in terms of changes in the median home price. The median price doesn’t measure actual home-price appreciation. Instead, it is the midway point of sale prices in an area for a given period of time, usually one month or one year. This means that half the homes sold during the period sold for more than the median price and half sold for less.

Malibu home prices surely increased substantially during the last year. But the magnitude of the increase in median home price in Malibu is indicative of a pickup in the upper-end market. Multiple million-dollar properties, which had languished since the recession of 2000, are back in demand. 

For years, first-time home buyers, who typically buy less-expensive homes, dominated the home-sale market. When the sale of less-expensive homes outpaces the sale of more-expensive homes, the median home price stays relatively low. In 2003, trade-up buyers accounted for 70 percent of the home sales in California, according to the California Association of Realtors. Trade-up buyers purchase more-expensive homes. When there is an increase in the sales of more-expensive homes relative to the sales of less-expensive homes, the median price increases.

A 10 percent increase in the median price doesn’t necessarily mean that your home appreciated 10 percent. It could have appreciated more or less than that. It’s difficult to measure absolute home-price appreciation. For one thing, you can find different rates of appreciation within one market. For example, from 2000 through 2002, the low end of the market appreciated in most places, while the upper-end market prices actually dropped in some areas during that time.

One measure of home-price appreciation uses refinances to gauge price increases and decreases. This measure is inaccurate at best. Last year, an Oakland, Calif., homeowner’s home appraised for a refinance at $870,000. This year, the same house appraised for $830,000. The only change during the intervening time period is that homes in the areas appreciated about 10 percent.

Refinance appraisals are notorious for being either high or low relative to current market value. The appraiser is merely attempting to justify the home value for the lender. So, if the borrower is taking out a small loan relative to the value of the home, the appraisal tends to come in low.

HOMEOWNER’S TIP: The only accurate gauge of your home’s current value is the market. However, it would be ludicrous to put your home up for sale simply to find out what it’s worth. A simpler approach is to keep an eye on sales of similar homes in your neighborhood. Visiting Sunday open houses, and then following up to find out the ultimate sale price is one way to gather useful pricing information. Another way is to ask your local real estate agent to prepare a comparative market evaluation.

In active markets where the inventory of homes for sale is very low, multiple offers can result in a sale at an astronomically high price. A Piedmont, Calif., home buyer recently paid approximately $400,000 over the asking price in a multiple-offer competition. This buyer was desperate after having looked for a home for two years.

THE CLOSING: It would be imprudent to base the value of your home on an isolated incidence like this. Fair market value is more accurately defined by the price a willing buyer will pay and the price a willing seller will accept, when neither is under duress.

Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.

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