With all the information about huge reductions in both the median prices and average sales prices does this mean that every home on the market is valued at 34% or 30% lower than the prior year? It sounds as though this is true, but not necessarily. Hundreds of homes are included in these calculations which blend homes whose values have declined by 10% and other homes whose values have declined by 60%.
For example, consider a home in Community A that sold for $1,300,000 in October 2007, and an identical home sold for $1,040,000 in October 2008, which is a 20% reduction in value. Consider a home in Community B that sold for $400,000 in October 2007, and an identical home sold for $240,000 in October 2008, which is a 65% reduction in value.
However, their average sales price decreased by 30%.
The point of this illustration is to set your expectations that averages cannot be applied to every home. If you are interested in understanding the current market value of a home, it is important you work with a professional who can provide specific information relevant to the home and community you are considering. In the above example, if a buyer is expecting a 30% reduction in sales value in Community A, they will be frustrated when the sellers in that community do not accept their offers. However, the buyer in Community B will end up paying more than market value if they are expecting a 30% decrease in value, when in reality the values in that particular community have reduced by 60%. While the homes in these examples are hypothetical, the statistics are very realistic. We have seen similarly disparate declines in various communities within the desert. If you would like specific information regarding a home or area you are considering, please give us a call. Please visit our website at www.StefaniRealty.com.