Home Values Versus Home Prices II
In yesterday's blog post, I addressed the concern of using average home prices instead of home values when determining real estate depreciation (or appreciation). Today, I want to conclude the thought by graphing the actual comparison of historic home values versus historic average home prices, and then look at an example of how mis-information is hurting many people who are trying to sell a home.
When we graph historic home values and prices over time, we see that they generally move in the same direction, but the rate at which they move and the times they make significant changes are different. This is important to know if you want to sell a home in Tallahassee, because the understanding of current home value trends is the most important aspect of being able to price a home to sell. We know from past posts that 57% of all homes that hit the market in the last year failed to sell, so it is obvious that the advice most people are receiving is not working and could very well be due to a lack of understanding of home value trends.
When we look at the real estate graph above, we can see that home value trends and home price trends generally move in the same direction (except in 2000), but the rate at which they move is not always the same. As a very specific example of this, the average home price in Tallahassee has dropped 21% since 2006, yet the average home value has dropped 31% during the same period of time. This means that home values have come down 10% more than one would think if just relying on the movement of the average home price in Tallahassee.
And do you think a pricing error of 10% can affect a homeowner's ability to sell in this market where there are so many properties for sale? I will tell you the answer is "YES" and this example is just one of the many reasons that choosing a knowledgeable and experienced real estate agent for the job of selling a home is so important. In-experience often leads to bad advice, and bad advice could cost you tens or hundreds of thousands of dollars.