# Should Ox Bottom Home Owners Fear Regression?

Ox Bottom home owners might have reason to be concerned with a mathematical concept known as regression toward the mean. You see, I have been playing around with a few ideas recently when trying to determine how far we should expect home prices in Tallahassee to fall, and a long-time friend reminded me the concept that I was investigating is known as "reversion or regression toward the mean."

This concept is defined on Wikipedia:

In statistics, regression toward the mean refers to the phenomenon that a variable that is extreme on its first measurement will tend to be closer to the centre of the distribution on a later measurement.

In simpler terms, when we see extreme results in home values, whether very high or very low, we should expect them to move towards the anticipated levels that historically we would expect. Due to inflation and growth in the Tallahassee real estate market, our level of real estate appreciation has been highly predictable in the past.

### Ox Bottom Home Values

When we look at historical home values in the Ox Bottom neighborhoods, we see values nearly double between 2003 and 2007. During this time,Â Â  there was not any rational reason for home values to skyrocket the way that they did, thus we expect market influences to bring about a correction that will move prices back towards our expected levels.

The real estate graph above should be quite disconcerting to Ox Bottom homeowners who might need to sell their home in the next few years. If one gives any merit to the concept of regression toward the mean, than we can expect a recovery that might take 8 or more years to correct. The next graph shows that Ox Bottom home values might actually be currently at 2018 prices!

### Calling All Mathematicians

I would love to receive feedback from everybody who fancies themselves somewhat competent in mathematics. What are your thoughts on regression toward the mean (used in housing values) and what do you think about home values in Ox Bottom?

One point that should be understood is that we've used the 1990s to establish the linear mean of home values, when in fact a longer period of time could prove that the 1990s were a "low point" on the line, thus suggesting our mean line could be somewhat higher. Nevertheless, homeowners in Ox Bottom could be in for a long recovery.