What You Need To Know About Home Price News

What You Need To Know About Home Price News




The National Association of Realtors (NAR) will release its latest Existing Home Sales Report tomorrow. The information it contains on home prices may cause some confusion and could even generate some troubling headlines. This all stems from the fact that NAR will report the median sales price, while other home price indices report repeat sales prices. The vast majority of the repeat sales indices show prices are starting to appreciate again. But the median price reported on Thursday may tell a different story. 

Here’s why using the median home price as a gauge of what’s happening with home values isn’t ideal right now. According to the Center for Real Estate Studies at Wichita State University:

“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 their monthly mortgage payment, not the price of the house. When mortgage rates go up, they have to buy a less expensive home to keep the monthly expense affordable. More ‘less-expensive’ houses are selling right now, and that’s causing the median price to decline. But that doesn’t mean any single house lost value. 

Even NAR, an organization that reports on median prices, acknowledges there are limitations to what this type of data can show you. NAR explains:

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

For clarification, here’s a simple explanation of median value:

  • You have three coins in your pocket. Line them up in ascending value (lowest to highest).
  • If you have one nickel and two dimes, the median value of the coins (the middle one) in your pocket is ten cents.
  • If you have two nickels and one dime, the median value of the coins in your pocket is now five cents.
  • In both cases, a nickel is still worth five cents and a dime is still worth ten cents. The value of each coin didn’t change.

The same thing applies to today’s real estate market.

Bottom Line

Actual home values are going up in most markets. The median value reported tomorrow might tell a different story. For a more in-depth understanding of home price movements, let’s connect.

22 Properties
Page 1 of 2
$740,000
Neighborhood: Whispering Hills
4
Beds
2F11/2
Baths
3,288
Sq.Ft.
1987
Year Built
2
Days on Site
20240041826
MLS
$45,000
Neighborhood: Kaiser Gardens
2
Beds
1
Baths
652
Sq.Ft.
1938
Year Built
4
Days on Site
20240041664
MLS
$115,000
Neighborhood: Sawyers Keego Harbor Sub
0.18
Acres
4
Days on Site
20240041864
MLS
$280,000
Neighborhood: Grenal # 01
3
Beds
1F11/2
Baths
1,075
Sq.Ft.
1965
Year Built
5
Days on Site
20240041205
MLS
$229,900
Neighborhood: Scotts Addition
3
Beds
2
Baths
1,380
Sq.Ft.
1950
Year Built
7
Days on Site
20240039338
MLS
$309,900
Neighborhood: Ingleside Farms Sub
3
Beds
2
Baths
1,800
Sq.Ft.
1953
Year Built
7
Days on Site
58050144881
MLS
$229,900
Neighborhood: Plum Hollow Estates No 1
3
Beds
1
Baths
1,116
Sq.Ft.
1964
Year Built
8
Days on Site
20240040314
MLS
$330,000
Neighborhood: Coachwood Square # 03
3
Beds
2F11/2
Baths
1,484
Sq.Ft.
1990
Year Built
12
Days on Site
20240039141
MLS
2
Beds
1F11/2
Baths
1,550
Sq.Ft.
14
Days on Site
81024027766
MLS
$325,000
Neighborhood: Warren Park Sub
3
Beds
2
Baths
1,474
Sq.Ft.
1989
Year Built
18
Days on Site
58050143756
MLS
4
Beds
3F11/2
Baths
2,108
Sq.Ft.
1999
Year Built
19
Days on Site
20240036267
MLS
$275,000
Neighborhood: Moulin Rouge Sub No 2
3
Beds
1F11/2
Baths
1,191
Sq.Ft.
1958
Year Built
20
Days on Site
20240036323
MLS

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