Recent Photos

 

 

Median Price Up? Huh? Don’t Be Fooled

I keep hearing from people – prices aren’t dropping, I saw the median prices for the area and overall they are up!

Don’t be fooled by median price. If starter homes (lowest cost homes) are out of reach for the majority of people and only more expensive homes are selling (their prices have dropped, so people think they are getting a “deal”), then the median will skew higher.

The Case-Shiller index gives a more reliable view of prices in any region. Prices are going down. Period.

Another more reliable indicator is the price per square foot. That is going down as well.

There is also a formula used to compare similar properties that have sold within a certain period of time. It’s called the RABINDEX – this blog tells you how to do it.

Keep your eye on the crash and inflate scams that are coming to light more and more with each passing day. This is just one type of real estate fraud that has falsely inflated the prices of homes.

The ordinary consumer now has access to more information than ever. Sites like Redfin tell you how long a house has been listed, so you can’t be tricked by MLS listings that are deleted then reposted – making it appear a house that has been on the market 300 days has only been on the market for 10 days, for example.

If you are convinced now is a good time to buy, do your research first. It may be a good time for you if:
You plan to live in the house for 15-20 years

You have a traditional down payment saved (20% or more) so when the value declines you don’t owe too much more than it’s worth (although you will have a real loss vs. a loss on paper if it declines 40% or more)

You can afford the taxes, insurance, and mortgage by spending only 30% of your income

You are in a non-volatile job position (meaning you won’t be forced to relocate in the next few years and have to sell your house at a loss) and a non-volatile marriage (meaning you won’t be forced to sell at a loss in a divorce settlement).

Caveat emptor.

NB – It will be interesting to compare the data on bank-owned home average/median prices now to the prices in a year or so when they have no choice but to sell.

Be Sociable, Share!

Leave a Reply

You must be logged in to post a comment.