Real estate prices are going back up, one news headline says. No, they’re dropping, says another. Confused buyers don’t know whether to move quickly or step back.
RICHMOND, Va. – Question: During the past year we’ve heard that real estate prices are falling and also that real estate prices are rising. Does anyone really know what’s happening with home values?
Answer: There are reputable sources that follow real estate pricing trends, and in recent months they’ve tended to come up with different marketplace results. In mid-summer, for example, some headlines looked like this:
- Zillow: “Home values reach new peak as owners hang on to houses”
- CoreLogic: “US Annual Home Price Growth Drops to the Lowest Rate in 11 Years in May”
- Black Knight: “Housing Market Reignites As Home Prices Hit New Record High In May; Inventory, Affordability Continue To Plague Potential Buyers”
- National Association of Realtors (NAR): “Existing-Home Sales Retreated 3.3% in June; Monthly Median Sales Price Reached Second-Highest Amount Ever.”
- Redfin: “Housing Market Update: U.S. Home Prices Rise For the First Time in Nearly Five Months”
If you look at these headlines you can see they’re different because they don’t measure the same information. They’re each “right” in their way. In addition, there are other factors to consider.
First, how does the information you see fit the marketplace? For instance, the Federal Housing Finance Agency (FHFA) reported that May home prices were 2.8% lower than a year earlier. But then consider that home values between May 2021 and May 2023 increased 17.9%. Should owners be upset because values recently fell 2.8% or delight in the results over two years?
Second, widely reported information may not reflect the activity seen in your neighborhood. This is because national trends and local sale patterns can be very different.
For example, the National Association of Realtors publishes quarterly metro market data. In the first quarter, NAR found that existing home values rose in 151 metro areas and fell in 68. Same period, but different results based on location.
Not only can metro areas differ, but neighborhoods within metro areas often see different sale and price activity. This happens because of local events such as more residential construction in one place when compared with another, the opening of a new school, etc.
Third, consecutive months can have differing numbers of days and three-day holidays. Weather can be a factor one month but not the next. A better comparison is often year-over-year data.
Fourth, to make matters more complex, we’re coming out of the Covid pandemic, a period that can make longer-term sale and pricing trends difficult to compare.
Meanwhile, for most buyers and sellers, the important numbers are local.
You want to check price trends and also related numbers such as monthly, quarterly, and annual sales; median sale prices; days on the market – separately for single-family homes and condos; new listing levels for existing homes and condos; monthly inventory figures; and listing-versus-sale price results.
Speak with local brokers for neighborhood information and be sure to ask about more than prices.
© Copyright 2023, Richmond Times-Dispatch, Richmond, VA