"WORST IN NATION: AREA HOME SALE PRICES PLUMMET IN 4TH QUARTER
" (from the Lansing State Journal, 2/15/08)
This was on the front page of our local paper. Why do the news makers report the most outrageous stats? It's probably because "Shock and Awe" sells papers.
A more accurate line would be:
"Lansing, like almost every other city in the nation, sees declines in real estate values and reduction in numbers of sales in the 4th quarter. On the whole, Lansing is not down all that much when you really analyze what's really happening."
My headline is more accurate, I doubt if anyone at the Journal would print it though. Here's the actual report sorted by largest decline from the National Association of REALTORS®. Note the "p" next to the "2007 IV" column heading and you'll see that these are preliminary numbers not the final numbers.
So what is really happening:
1. Median just means the middle. So if 5 homes sold today, one for $300,000, another for $350,000 another for $109,000 another for $105,000 and the last one for $108,000, then the median would be 109,000. Because it's the one in the middle of the others.
2. Don't confuse median with average. The average sale price in the above set of numbers would be $194,400 (add the sale prices together and divide by 5).
a. The average home price in the Lansing area in December of 2007 (from Michigan Association of REALTORS®) was $141,022. Only a -5.79% drop for the year and a -2.18% drop from the 3rd quarter, 2007 average.
b. Lansing is as we have been saying for 15 years a very stable, boring market (think of the tortoise not the hare); just like you want real estate markets to be. We did not see home sale prices double in the last 5 years and we wont see them cut in half either.
3. Don't confuse appraised value with market value. Over the last 5 years or so, home owners were going to their mortgage lenders every two years or so and reducing their interest rates. Every time, their home value seemed to go up. Remember, the value has not increased until you sell it.
4. Year to date, I am still finding that the appraised value of my client's homes are at or around their 2002 - 2004 appraised values and more often than not, still at or around the SEV x 2.
So,
1. If you don't need to sell your home, don't. Rent it or keep it for a while, but if you don't need to sell it - Don't. One less house on the MLS will keep values higher.
2. There are some great deals out there as banks own more and more homes. Consider buying one, fixing it up and renting it to a family in need for a very fair rent. It will get a house off the market, improve a neighborhood, help a family and you will almost certainly do well financially.
3. Join the Cornerstone Home Loans Supply and Demand team. We have set a goal to help our clients and Realtors to sell 300 homes in the Lansing area. These are both REO and non-REO homes. We will track the sales and keep you updated. Read our previous post on why this is important for the Lansing area.
4. Subscribe to our Blog to stay current on the real estate market - take advantage of this. Get the facts before you start getting down or making misinformed decisions. If you want a more fair perspective - keep reading our blog.
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