Chapter 4.1, Problem 11E

Houses in California are expensive, especially on the Central Coast where the air is clear, the ocean is blue, and the scenery is stunning. The median home price in San Luis Obispo County reached a new high in July 2004, soaring to $452,272 from $387,120 in March 2004 (San Luis Obispo Tribune, April 28, 2004).

The article included two quotes from people attempting to explain why the median price had increased. Richard Watkins, chairman of the Central Coast Regional Multiple Listing Services was quoted as saying, “There have been some fairly expensive houses selling, which pulls the median up.”

Robert Kleinhenz, deputy chief economist for the California Association of Realtors explained the volatility of house prices by stating: “Fewer sales means a relatively small number of very high or very low home prices can more easily skew medians.”

Are either of these statements correct? For each statement that is incorrect, explain why it is incorrect and propose a new wording that would correct any errors in the statement.