Rising median home prices? Is the Atlanta real estate markets getting better or worse? What does it mean to you? I think a lot of real estate agents and brokers really don't know how to interpret sale statistics. Contrary to belief, a rising median home price is not an indicator or market strength. It does not tell you if a seller sold at a profit or loss. It is just middle number that's all! That means half of all home sold were above the median price, and half were below. That is all that median means! There was a lot of confusion this week when the Standard and Poor's Case Schiller Report came out and reported that many cities declined in value, but a few rose. Most agents became euphoric becasue they did not understand the data. Can they not see the reality of the market? What about the tear down home in an older part of town that is rebuilt as a mansion. So when the average price of neighboring homes sold is in the 350's the new home sells for 725K! A high sale in an older neighborhood effects the median price making it much higher. There is no magic here!
A better measure of the health of broader real estate market is a comparison the number of homes sold or units sold. First it is smart to define the parameters of your comparison. Single family homes or condos sold during the same full period is a smart way to go. ( It is always best to compare apples to apples!) A completed period of time is a better way to compare that is a month that all data has been reported and is in. So August 1. 2006 to August 31, 2006 the number of Single Family Homes Sold Compared to August 1. 2007 to August 31, 2007. In the Atlanta area, if we compare this number, it is easy to see that even though the median price of a home sold in 06' Vs. 07' rose from $276,882 to $299,527 in 07' the number of sales dropped from 6652 homes in 06' to 4343 units sold in 07' that is a drop in sold homes or a decline of 34.6% from the same month a year ago. Dollar wise a drop in the dollar volume closed also. The total volume dollar amount for the the homes sold in 2006 was 1,762,166 Vs. 1,211,1378 in 2007' So it is hard to get excited when agents talk about the market has turned the corner and prices are rising again because the median home prices is rising. It is one number and only a small piece of the big picture. The number of homes available must also be compared, market absorption rates, seller concessions, commission paid, and days on market have weighed into the equation also.
To view the Nation Association of Realtors Numbers for the last quarter for your area, click here!
Metropolitan Area Existing-Home Prices and State Existing-Home Sales
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