Few things to consider when analyzing residential real estate market price trends

 1) General search parameters statistically compiled are not as reliable as a specific market segments defined and compiled.  For example, a few market segments may increase the average and median sold price while others are declining.  In a larger market view the declining market segments may be "hidden" in the data set and the results could be misrepresented.   

2)  Grouping all units with various condition categories also skews the average and median sold price.  Movement of the median sold price is typically used to illustrate price trends for a defined time period.  The most reliable method to reflect price trends is to geographically define the market segment with physical features used as search parameters than categorize into 3 main condition categories. Compile the 3 data sets and measure median sold price for each condition category (subjective analysis but is rooted in pictures and commentary provided by realtors).

3)  With the increased absorption rate through out the Washington D.C. metro area median sold prices are indicating stable to increasing trends from multiple year low points. However, in many case studies inventory is declining but still not in balance with demand and concessions are a large part of most transactions. 

Demand is fueled by a reduced price structure and economical stimulus.  When prices hold without concessions or market participants not participating in the concession market are purchasing at a similar price structure than you have something to hang your hat on as indicating either a stable or increasing market. 

 Many neighborhoods across the Washington D.C. metro area do not have a balanced inventory and absorption rate (units that come on the market and are withdrawn/expired without selling are included in the compiled data) and thus the indication of stable or increasing markets may be a temporary status in some market segment.  With a possible increase in foreclosures in 2010 and 2011 a retreat in the price structure may be a probable outcome.

Carlton Mitchell  www.Appraisersoncall.com