If you follow Belmont home prices closely, or any other city on the Peninsula for that matter, you may occasionally see a headline that says the median price jumped dramatically—or fell just as sharply—from one month or quarter to the next.
Did Belmont real estate really change that much?
Usually, not nearly as much as the median price suggests.
The reason is fairly simple: Belmont is a small housing market with a relatively small number of homes selling during any given period. When the sample is small, just a handful of unusually large, small, expensive, or modest homes can have an outsized effect on the median.
The Problem With a Small Sample Size
The median sale price is simply the midpoint of all the homes sold during a particular period. Half sold for more and half sold for less.
That works reasonably well when you’re looking at thousands of transactions. But in a community the size of Belmont, the mix of homes that happens to sell can change substantially from one period to another.
Imagine that one month has a larger concentration of two- and three-bedroom homes. The following month, several larger four- and five-bedroom homes happen to close escrow.
The median price could rise significantly—even if the underlying value of an individual Belmont home barely changed at all.
The reverse can happen just as easily.
That is why we are always cautious about interpreting a short-term change in Belmont’s median sale price as an equivalent change in property values.
Why We Also Watch the Case-Shiller Index
To give our clients another perspective, we also follow the S&P Cotality Case-Shiller Home Price Index.
Case-Shiller uses a very different methodology known as repeat sales. Instead of simply comparing the homes that happened to sell this month with a completely different group of homes that sold previously, it identifies instances in which the same house has sold more than once and measures the change between those transactions.
That is important because it largely holds the property’s size and basic characteristics constant. You’re comparing a house with itself rather than comparing, for example, a 1,400-square-foot home sold last year with a 2,700-square-foot home sold this year. S&P Global
Case-Shiller then combines a large number of these repeat-sale pairs to measure the broader movement of home values across a metropolitan area.
It Also Screens the Data
There is considerably more behind the methodology than simply finding two sales of the same property.
The index is designed around arms-length sales—transactions in which an unrelated buyer and seller are each acting in their own economic interest. Transactions that can be identified as non-arm’s-length, such as certain transfers between family members, are excluded. It also screens for apparent data errors and transactions involving properties that have undergone significant changes.
Very short intervals between sales are also excluded from the repeat-sale pairs because those transactions are less likely to represent normal market appreciation. That screening can eliminate many situations involving short-term flips or substantial property changes that could otherwise distort the index. S&P Global
The result is a much smoother measurement of market appreciation or depreciation, rather than simply a measurement of which houses happened to sell during a particular month.
Median Price and Case-Shiller Tell Us Different Things
That doesn’t mean Belmont’s median sale price isn’t useful. It is.
The median tells us something very important about what buyers are actually purchasing in Belmont right now. We track it along with inventory, days on market, sale-to-list-price ratios, price per square foot and individual comparable sales.
But the median can be noisy.
Case-Shiller helps us look through some of that noise and see whether the broader underlying market is actually appreciating, depreciating or remaining relatively stable.
There is one tradeoff: Case-Shiller is not a real-time indicator. It uses a three-month moving average, and the published index currently trails the market by approximately two months while transaction data are collected and analyzed. S&P Global
So we wouldn’t use Case-Shiller by itself to determine what a Belmont home is worth today.
Why We Include It on Our Market Valuation Page
This is exactly why we include Case-Shiller alongside our local Belmont market data.
Local sales tell us what is happening here and now. Case-Shiller helps us see the underlying trend.
By looking at both, we can reduce the distortion that occasionally occurs when a small number of unusually large or small homes changes Belmont’s median price.
No single statistic can tell you exactly what your home is worth. For a community as diverse—and as relatively small—as Belmont, understanding home values requires looking at the composition of the sales, not simply the headline median.
And that distinction can make a very big difference when you’re trying to determine what is actually happening to the value of your home.
As always, thankks for following us and reading along. Reach out to us with and questions or clarification.
All the best,
Drew and Christine Morgan are experienced REALTORS® and longtime Mid-Peninsula real estate professionals based in Belmont, California, where they own and operate MORGANHOMES, Inc. They help buyers and sellers navigate important real estate decisions with experienced guidance, thoughtful strategy, and highly personalized service. Their achievements include RE/MAX’s prestigious Diamond Club Award, recognition among the Top 50 RE/MAX agents nationwide, and ranking among the Top 3 in Northern California.
To speak directly with Drew or Christine, call (650) 508-1441 or emailinfo@morganhomes.com.
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This article provides educational information and is intended for informational purposes only. It should not be considered real estate, tax, insurance, or legal advice; it cannot replace advice tailored to your situation. It’s always best to seek guidance from a professional familiar with your scenario.
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