What You Need To Know About Home Price News

What You Need To Know About Home Price News

May 17, 2023

The latest Existing Home Sales Report from the National Association of Realtors (NAR) will come out tomorrow. The information it has about home prices could be confusing and even make for some scary news. All of this is because the NAR will report the median sales price while other home price indices will report the price at which a home was sold again and again. Most of the indices of these repeat sales show that prices are beginning to go up again. But the median price that is announced tomorrow could show something different. 

Gauging the median home price isn't the best way to figure out what's going on with home prices right now. According to Wichita State University's Center for Real Estate Studies:

“The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less. While this is a good measure of the typical sale price, it is not very useful for measuring home price appreciation because it is affected by the ‘composition’ of homes that have sold.

For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”

People buy homes based on how much they have to pay each month for their mortgage, not necessarily on how much the house costs. When mortgage rates go up, they have to buy a cheaper home so that the monthly payment is still manageable. Right now, more "cheaper" houses are selling, which is making that median price go down. But that doesn't mean that any of the houses in your area lost value. The number of bidding wars shows that the Fox Cities market is still on fire!

Even NAR, a group that reports on median prices, admits that this kind of information can only tell you so much. NAR explains:

“Changes in the composition of sales can distort median price data.”

Here is a simple description of what median value means:

You are carrying three coins. Put them in order from least expensive to most expensive:
If you have one nickel and two dimes, the center coin is the dime, which is also the median value of ten cents (we are not talking the average amount here = 8.33).
If you have two nickels and one dime, the median value (once again, average would be different) of the coins is five cents.

A nickel is still worth five cents and a dime is still worth ten cents in both situations. The worth of each coin stayed the same.
The same is true of the real estate market today.

Are you still confused? Then call/text Wizards of Real Estate LLC at (920) 209-1079 and let us walk you through the process!

The Worst Home Price Declines Are Behind Us [INFOGRAPHIC]

Some Highlights

• While home prices vary by local area, they’ve already hit their low point nationally, and now they’re starting to rise again.
• Last July, prices started to decline, but around February, they began climbing back up.
• If you put your plans to move on hold waiting to see what would happen with home prices, let’s connect to discuss if now’s the right time to jump back in.

Bottom Line

In most areas, the real value of homes is going up. The story told tomorrow will look different when the median number comes out tomorrow. Let's talk if you want to learn more about how home prices change.