Charting The Exponential Distribution Of Home Prices In The US By Market Area

Tyler Durden's picture

On one end, you have the destruction left over from the extinction of US auto manufacturing. On the other end, you have PIMCO. And inbetween the two, there are 294 home markets, which make up the exponential curve of US real estate prices. It is not surprising that the non-normal distribution in home prices follows quite closely the Talebian extremistan distributions expected (even though the last word is an oxymoron in this context) out of modern day markets. We wonder which end of the curve the President has got his eyes focused most on these days for "excess efficiency" retention purposes.

According to the latest Coldwell Banker home listing report (link), the richest people in America reside in the following cities, which boast the following average home prices:

1.Newport Beach - $1,826,348
2.Palo Alto - $1,479,227
3.Rye - $1,325,500
4.San Francisco - $1,325,103
5.La Jolla - $1,210,300
6.Greenwich - $1,195,614
7.Wellesley - $1,080,458
8.Pasadena - $1,043,683
9.Honolulu - $1,026,821
10. Santa Barbara - $1,024,661

Alas for every market boasting an average home price over $1MM (ten of them), there are citis on the other end of the spectrum. And using the completely arbitrary cut off metric of $250,000, there are 145 markets whose homes cost less than that particular magic number, lef by the following:

1.Detroit - $68,007
2.Grayling - $84,625
3.Sioux City - $85,967
4.Cleveland - $87,240
5.Muncie - $100,314
6.Norfolk - $107,814
7.Kansas City - $112,449
8.Canton - $114,325
9.Port Huron - $116,267
10. Topeka - $116,343

At least Detroit is at the top of something. As is the broke state of California - with 6 of the 10 most expensive markets residing in the Golden State. We dread to think what will happen once the state's broke administrators realize how much wealth could be extracted from local housing if only they could collect a liiiittle bit of the net worth of each home (assuming said home is not already underwater on the debt it is pledged to).


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Buck Johnson's picture

You are correct and the blog is also.  The shadow inventory is slowly coming onto the market and eventually it will just fall on the market and we will see housed fall drastically in price.

oklaboy's picture

great link, and thanks. I read DrHB alot, his stuff is right on. Coming to allllll the special neighborhoods near you!! 

mynhair's picture

Wow.  Thought Santa Barbara would score higher.  Nice access to the Channel Islands.  Well, same with Newport.

Excise taxes, bitchez!


Cognitive Dissonance's picture

Is it a coincidence that Newport Beach is at the top and Bill Gross recently moved to Newport Beach? Maybe it was him that pushed them over the top?

BTW, I'm officially calling him "Sneak Peak" Bill Gross from now on since he's all but admitted to getting a sneak peak of FED data and opinions. 

Misstrial's picture

Bill Gross has lived in Newport Beach for some time; only recently he and his wife purchased a  home larger than the previous.

Don't forget that Donald Bren lives in Newport Beach (spec Newport Coast) along with some of the Irvines.


Misstrial's picture


Not junked by me; nonetheless, the big money is in neighboring Montecito (93108/9).

Newport is not close to the Channel Islands. Maybe you're thinking of Catalina Island.


max2205's picture

Can you post a chart that I can see. It's blurry

Lux Fiat's picture

Try opening the chart in a new tab or window to see a larger version than in the post.

faustian bargain's picture

or, click on the link to see the full list of 296 markets.

max2205's picture

Thx but I'll try it on my pc. Freaking iPhone

Lux Fiat's picture

Yes, I am waiting for a phone that can do a holographic heads up display onto thin air.  Surfing ZH and other sites on the cell phone while out and about leaves something to be desired.

ziggy59's picture

its hamptons made the cut?


please, with the most expensive real estate deals in the cuntry?  

keeping below the radar?



Mercury's picture

You know, I've always wondered: Given that a place like Southampton A) doesn't have that big of a year-round population and B) has plenty hefty property taxes on all that fancy real estste - what the hell do they do with all that money?  I mean, after you build electric-everything public schools and give Range Rovers to the cops there still has to be enough money left over for a medium sized space program...

They probably gave it to Bernie Madoff.

Carl Marks's picture

Wait until the reds seize the wealth and redistribute it to the 90% of people in the U.S. who are unfit for a modern society.

Seer's picture

You've been deemed unfit for a modern society.  Sorry, but you'll have to go.  It's for the good of humanity- to rid ourselves of self-righteous people, don't ya know?

Reductio ad Absurdum's picture

No, Seer, brainwashed people like you need to go. You're killing off the human race with your "I'm OK you're OK" bullshit.

Mr Lennon Hendrix's picture

Money can be a blinding thing.

Mercury's picture

The Exponential Distribution Of Home Prices?   I'm not so sure this is a particularly new phenomenon.  Although the spread is probably wider than ever.  Once cross country travel and ethnic/cultural segregation are no longer big issues, it's all about money...and rich people want to be near other rich people. On the other end of the scale - people who have the wherewithal to get the hell out of places like Detroit usually do.

So, yeah...location, location, location.

This, in a nutshell is why pushing home ownership on as many Americans as physically possible didn't have the desired wealth-building effects.

Reductio ad Absurdum's picture

The chart is NOT a distribution; it's merely a listing of different home prices from different regions of the country. To be a distribution it would have to be a histogram where the total number of houses for sale in each price range was accounted for.

deadparrot's picture

I shudder to think of the ramifications of abolishing Prop 13. I'd still love to see it happen.

Mercury's picture

To punish people who have bought real estate with their money or because municipal governments aren't quite big enough yet?

Reductio ad Absurdum's picture

Seriously, what kind of an idiot is against Prop 13.? The whole point of Prop. 13 was to reduce the size of government by reducing the amount of money it gets -- starving the beast. Yet Californians wanted it both ways: big government and small taxes. They need to go back to the original goal of Prop. 13 and reduce the size of their government. Repealing Prop. 13 just leads down the primrose path towards government control of people's lives. Haven't you read "1984" or "Brave New World"? Or did the government ban those books from school?

Pillgrimm's picture

Homes sold in California pick up the sale price as the new tax basis. New buyers don't get a break. Prop 13 would protect a property that was inherited, but that's not what we are talking about. Lets face it, even if there was a windfall with a Prop 13 repeal, the revenue would be squandered and never used to pay off old debt. It would be used to lever new debt.

aheady's picture

Is that Norfolk, Virginia? Ack.

trav7777's picture

property taxes are a relatively untapped source of gov't "income."

Seems inevitable that they will begin taxing anything they know about.  Is it their problem if you're underwater?

Atomizer's picture

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

--  Ronald Reagan

Seer's picture

Reagan and Co should have known, they were the next booster phase of this insanity...

And that dick-head Gingrich.  I mean, that guy was hauling in more pig feed than any other district except the viper den of DC.

Reductio ad Absurdum's picture

Seer, you are at the wrong website.

docj's picture

Frankly, I wouldn't care if they taxed Wellesley (MA, I assume) into extinction.

Implicit simplicit's picture

Max, you need the new maxi-pad.


Ended under wrong reply person. dam it!

Not For Reuse's picture

shit, it's blood in the str33tz dude,,,i'll buy long as it's with someone else capital

Miles Kendig's picture

Location  Location  Location

fearsomepirate's picture

The extinction of US auto manufacturing?  The Toyota plant 15 minutes from here says hi.  China and Japan make more than us, but we still made over 5 million cars last year.

MikeyKid's picture

We should sell CA on the open market, throw in the boats as a bonus.


Seer's picture

Hm... I wonder what affect that this would have on non-Californian's food prices?

rosiescenario's picture

...yes...most folks are clueless about CA ag business and how much the entire country depends upon it. In fact most of the population within CA is also clueless about the ag business here. For example, without CA you better get used to a non-tomato based ketchup or spaghetti sauce.

Maybe we should just slap an export tax on all the food leaving our state and headed East....we could balance our budget pronto.

pan-the-ist's picture

They'd find a way to make better tomatos --out of corn.  They only reason they haven't done that yet is to keep more Kalifornians employed.  You don't feed the country, now go back to sleep.

Ludic Fallacy's picture

Maybe we should just slap an export tax on all the food leaving our state and headed East....we could balance our budget pronto.


Thankfully that'll never happen.  That's precisely what the inter-state commerce clause in the Constitution was intended for. 

blindman's picture

@ mercury
"This, in a nutshell is why pushing home ownership on as many Americans as physically possible didn't have the desired wealth-building effects."


it worked as intended, not as advertised. create debt out of nothing, have

it supply the economy as other economies are being seeded with the financial

instruments constructed from that debt, and create fortunes doing it.

the wealth was created it just wasn't in the name of the debtor. but

it is highly unstable and politically dependent, hence the bailouts required

and the humiliation of it all.

etc. you could write a book..! or ten thousand.

rosiescenario's picture

Just sort of eye balling that looks like a typical 80:20 scenario...20% ofthe cities account for 80% of the total value....


The really big hit is also coming now in reduced property taxes (especially on commercial property) and this is going to result in large shortfalls for local government's least here in CA...maybe no the Hamptons or Nantucket.

Grand Supercycle's picture

Short signals detected yesterday have now increased.

Ludic Fallacy's picture

Doesn't anyone else find this chart disingenous?  If it was plotted with #markets on the y-axis, and average home prices on the x-axis, it would be a normal distribution with a positive skewness.  I dunno, this chart seems slightly dishonest when comparing to Taleb's extremistan - seems pretty Gausian to me...

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