Location, location, location
As you know if you've been following along for a while, I fear the apples-to-kumquats comparisons that can happen when the homes that sold in a community last year are very different than the ones sold the year before. You can end up with a huge change in price just because it was all older rowhomes one year and newly built condos in the other, for instance.
So as usual, I threw out any ZIP or city neighborhood that didn't have at least 10 sales each year, figuring that would help. I also -- for my peace of mind -- did a separate analysis of all the areas with a large number of sales, just to see if the overall trend remained the same. It did. (Cue the sigh of relief.)
Just remember when you're checking out individual ZIP codes or city neighborhoods, though, that there could be factors at work more complicated than simple gains or losses in value. Some of that could be related to the market: A drop in a pricey area might signal that homes that were average in 2006 are sitting on the market now, having trouble finding a buyer, while less-pricey homes are getting contracts.
Overall, expensive areas were more likely to drop in average price last year while cheaper areas were more likely to rise.