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Pricing Is ALWAYS Local … Most of the Time

We understand that real estate is intensely local. Whether you are thinking of buying or selling a home, you should sit with a real estate professional familiar with your local area. However, that does not mean that what is happening nationally doesn’t apply to your market. What is taking place with home values is a perfect example of this. Prices are softening in many parts of the country.  We all hope that our region is the exception to this trend. Before we buy or sell we should make sure. Just how widespread are these price declines? Let’s take a look at what the current pricing indices have found.

S&P/Case Shiller

Their Home Price Index shows that 18 of the 20 cities they monitor had year-over-year depreciation. San Diego and Washington D.C. were the only two markets to record appreciation. However, San Diego was up a “scant 0.1%”, while Washington DC posted a healthier +3.6% annual growth rate.

CoreLogic

Their Home Price Index states:

“Of the top 100 Core Based Statistical Areas measured by population, 86 are showing year-over-year declines.”

National Association of Realtors (NAR)

Their Existing Sales Report showed that 13 of 17 metros they report on had median sales prices decline in the last year. Only Dallas/Fort Worth, Houston, San Diego and St. Louis saw their median price increase.

Federal Housing Finance Agency (FHFA)

Their website has a visual that shows how widespread the price situation has become:

Bottom Line

Pricing is a major challenge in the vast majority of regions right now. Definitely sit with a local agent. However, make sure they tell you what you need to know not just what they think you may want to hear.


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5 replies
  1. Troy Roark
    Troy Roark says:

    Isn’t is interesting? In our little pocket of Real Estate nirvana (Springfield IL), we have NOT seen an overall depreciation. In fact, our median home price is up, according to our local Real Estate Association statistics.

    I encourage my clients to spend a whole lot more time concentrating on what the neighbors house sold for, instead of what the news says. Again, I know we’re a insulated market.

    I will say this: From a national point of view, if housing numbers are bad enough, the Fed seems much more likely to drop interest rate to bolster sales. A silver lining if nothing else.

    Reply
  2. David Mott
    David Mott says:

    Trulia and Zillow can produce a median price per square foot (ppsft) sold number for a city area, with the larger the number of samples, the more accurate the value.

    Trulia has the median ppsft for San Diego at $254. San Francisco is $500. Seattle is $277. Detroit, MI is $63. Denver, CO is $168.

    The number for Eugene, OR is $139 right now. It fluctuates. The insurance man here says that homes are insured on a rebuild rate of $130 sqft. An appraiser just appraised our house and his square foot comp adjustment value was $50 a square foot. There is no way that you could build this house for $50 a square foot.

    A previously owned home (and lot) seems to have an elastic value from many different perspectives.

    Reply
  3. Karsten Reed
    Karsten Reed says:

    Cost per square foot is a dangerous valuation technique. There are so many variables that influence a homes value, including location, condition, quality of construction, square footage, age, etc….

    I have seen way to many people make purchasing decisions with primary emphasis placed on a $ per square foot, rather than location or quality of construction/condition, which are factors that influence $per square foot.

    In our market there is an oversupply of homes and in many cases sellers have to practically “give them away”. Some homes don’t sell and it is common to see homes selling for far less than the cost to construct.

    An insurance value is usually not going to be reflective of a market value due to differences in approach to value. The bottom line is that a bank is only going to loan what can be supported by market data, and if market data indicates that a home is worth “50 dollars per square foot” then it doesn’t matter how much it costs to build.

    The safest bet before purchasing is to call a local real estate appraiser and get their feedback on the market you are interested in purchasing property in.

    Reply

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