UNDERSTANDING THE REAL ESTATE MARKET
Over the last few months we all have heard/read the real estate market is recovering! That?s a good thing. The question is how much? I went back in time and looked at sales for condos and homes in Livingston County Michigan. Starting with 2003, (the local multi listing service only holds sales back to 2003), to 2012. I came up with the following graft. It is made up of average sale prices, median sale price and marketing time. I have also included the number of sales next to the year at the bottom of the graft. To understand the graft I should explain what each tells us.
? Average Sales Price: Average sales price is calculated by adding all sales prices than dividing by the number of sales. This tells us if the average home price has increased or decreased.
? Median Sales Price: Median sales price is best explained by example. If you look at the numbers 1 to 9 in order, the middle number, (5) is the median. Median sales price is a great way to track what segment of the market is most active. If the median sales price decrease from the average sale price, it implies we are selling more homes under average sales price than above. As the median sales price moves closer to the average sales price it implies we are selling more over average price homes.
? Days on Market: Days on market gives us some insight in to active inventor. With more homes on the market, the greater the choices for buyers and marketing time will increase. With fewer homes on the market, less choice for buyers, marketing time will trend down and prices will increase.
Bank inventors have dropped, traditional home sellers have returned to the market! Pushing home prices higher! Inventor has decreased, decreasing marketing time and pushing prices higher! The median sales price is inching closer to average sale price. Home owners that thought they were under water with their mortgage could be surprised. They may have returned to an equity position with their home making it easier to sell. If a home owner is looking to move up, it is a great time. Upper end homes have not recovered as quickly as the average home, but are selling. If a Seller is looking to down size, they need to realize smaller homes will have 2 or 3 buyers for every home that enters the market. The longer they wait the harder it will become. Buyers will have to act quickly or miss out on good homes. There are more buyers than homes, and builders cannot afford to build in the most active price ranges and areas. No new home inventor. Bottom line, the Livingston County real estate market has recovered at a surprising rate. We have not reached the highs of 2004/2005, but we are far above the lows of 2009/2010.
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