An example of a horribly misleading graph
Everyone knows the housing market is collapsing and everyone seems to think that their house is no longer worth anything and not selling. BBC posted this graph a while ago which shows the percentage that housing prices are changing.
Lets interpret: For the first 5-6 months of 2007, prices went up about 11% a month.
By the end of the year, housing prices were still rising by 5%, which on average, shows that over the whole second half of 2007, prices were still rising by 8%.
For the first 3 months of 2008, housing prices were (still) rising, but by not as much.
Only the last 4-5 months of the graph actually show prices falling. on an average of about 5-6%. (I shall say 5 months at 6% to be fair).
Let’s use some real numbers…
The BBC article says that the housing market has dropped 10.5% in a year. Which is technically true, but only at the most extreme case from August last year to August this year.
So, say I had a £250,000 house in 2006. In August 2007, it went up by 11%, so it is now worth £277,500. In August 2008, it has dropped 10.5%, so it is now worth £251,100, which is still more than 2006.
I’m not saying the housing market isn’t going down and that it’s all media hype. It is a considerable difference to that of a year ago, which is unfortunate for people trying to move, but they shouldn’t be put off.
What I’m saying is, LOOK AT THAT GRAPH. It gives the impression that the housing market is plummeting downwards at a frigtening speed. Which is not true, even at it’s worse case scenario, it still shows a small increase in value on property over a 2 year period. By using the “year change %”, it makes it look a lot worse that it is.
A quick doodle of what the graph really should looks like, showing increase in prices, then the fall in prices starting a couple of months ago