I have to shake my head when I read the home price statistics each month. Personally, I think macro home pricing statistics are meaningless. Whether or not the price goes up or down in a market area is basically useless information. Allow me to explain…
Home pricing is about microeconomics, not macroeconomics. In other words, it is most useful to look at home pricing by neighborhood, not across an entire city, county or state.
When you go into a neighborhood where prices are falling substantially it is not uncommon to hear an owner say, “I just read that home prices have gone up in the Indianapolis market area-why are you telling me that my house is not increasing in price?”
Let me explain with an example. Let’s say 100 homes are sold in a market area last month and six of the homes are very expensive in comparison to the other 94. Then let’s say 90 homes in the same market area were sold two months ago and only one home was very expensive compared to the other 89. In this scenario, the average home price will increase.
However, 183 of the 190 homes sold over the past two months in this scenario are not in the same neighborhood as the seven very expensive homes. Basically, we are not comparing “apples to apples”. Some neighborhoods may have seen a decrease in price and others may have seen an increase.
As I’ve written before, this all comes down to having your Realtor conduct a good comparative market analysis based on the price of homes sold in your neighborhood. You should be prepared for the comparative market analysis to show prices that are higher or lower despite what macroeconomic statistics you’ve read in the news.
I caution you against being talked into listing your home for more than the market says it’s worth – if you do, you can plan on it sitting on the market and for your listing to get stale.
Instead, make your home look as best as your can and talk to an honest Realtor about the value of your home. When that happens, plan on it selling quickly!