I am sorry but I have a problem with not reporting to the public the truth and spinning the numbers to make things look good. My local association and the NAR are reporting things to the public that I do not agree with, and I need to stand up. They are saying the median price is similar to before and prices are only down less than 1%, and in many areas the median price is up! That is hurting me when I am sitting at someone's dining room table with a listing contract and they want a price I know I can not get, or want to hold out for a higher price when an offer comes in, which if they don't take could be a disaster for them. Don't somewhere along the line we have a duty to tell our clients the truth? So why doesn't our association back us on this? I am not a doom and gloom, but let's give our clients the truth and let them decide.
Median price is a bad stat. The median price is simply the price of the home that sold in the middle. For example. let's say in December three homes sold: 75,000, 80,000, 85,000. What was the median price for December? If you said 80,000 you would be right. Let's take January, and 3 homes sold as well. $ 68,000 81,000 and 81,500. And the median for January? 81,000. So, did homes sell for more money in January? The median price went up, was reported in the paper that it went up, and the guy down the street wants to list for more money. Median prices means the pile has moved to the right or left.
I did an analysis in my market and found that the average sales price was similar, but the selling price per square foot was lower by almost 9,5%, although the median was nearly unchanged. I also found that the average size (in square feet) of the homes that sold increased 5%. What did that show me? That the larger homes are still selling while the average size home is not. The pile is just shifting to the right. In any down time, it always affects the rich later than the average joe. People with money and good jobs are still spending, as they always do. They are bargain hunting for homes they can get cheap, so as the expensive homes in an area sell, the median price goes up, while the guy in the average home can't move his. Yet the local realtor group reports the median price has dropped 1%, and his agent is sitting at his table wanting him to reduce his home by 10% so it can sell. So who do you think he is going to believe? The guy at his table or the spinners at NAR? You are right again! He will fire his agent and try another, because if the newspaper says it is so, it must be.
Thanks for listening. Do the analysis for your area, it is easy to do and compare the cost per sq ft and see if I am right. Big homes are selling, and foreclosures are selling, but the guy in the middle, as always, is in trouble.
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