Determining if home sales are dropping isn’t an easy statistic to identify since the homes that sold in 2010 were different homes than the ones that sold in 2011.
Think of it this way. Lets imagine that the majority of buyers one year were buying homes priced between $200,000 – $300,000. Let’s suppose that there are some layoffs in local companies. Then the national news TV stations start highlighting concerns about the economy, and many of the middle class buyers decide to not move until things get better. In addition, reports about the availability of foreclosure homes that are in good condition boost sales for bank-owned homes that are priced $100,000 – $200,000.
If you follow this analogy, then the median sale price in the year before the economy started struggling would be higher than in the following year. However, it’s very possible that the $250,000 home in a particular subdivision didn’t lose any value at all. It’s just more people were buying cheaper homes.
When we are working with a client, we can pull similar homes in a specific subdivision or neighborhood and determine if home sales are stable, dropping or starting to increase for that micro market.
However, when you look at average sale price for a region or city, it’s impossible to know if home sales are truly dropping or if more buyers are simply choosing to buy less expensive homes. Keep this in mind when you are listen to national reports that talk about home price trends.
The charts below show the median sale price of homes and condos in the St. Louis area. They also show the median ORIGINAL listing price, so you can see how much successful sellers who ultimately sold their property came down from their initial price.
The blue column represents median sale price of properties, and the green column shows the median original listing price.
St. Louis County Sold Homes: Original Listing Price and Closing Sale Price
St. Louis City Sold Homes: Original Listing Price and Closing Sale Price
St. Charles County Sold Homes: Original Listing Price and Closing Sale Price
St. Louis County Sold Condos: Original Listing Price and Closing Sale Price
St. Louis City Sold Condos: Original Listing Price and Closing Sale Price
St. Charles County Sold Condos: Original Listing Price and Closing Sale Price
While the number of closed sales increased in 2011, the median sale price was down. This could mean that sale prices are still dropping. It could also mean that more buyers decided to be conservative and opted to spend less. Or it could mean that more first time buyers were purchasing and fewer affluent buyers were moving.
The only way to know for sure if YOUR home is losing value or if prices are stabilizing for your neighborhood is to have an agent pull the sale prices for homes like yours that are located near you over the last few years.