Real Estate Appreciation Case Study (32312)

Real estate experts are often way-off on their projection of home values (real estate appreciation), and the 32312 zip code provides a perfect example of how and why they error. Today, we'll show a great example of what occurs when home values continue to decline, but homebuyers begin to select more expensive homes. It sends the kind of information to people who desperately need to sell a home that is completely wrong, so I thought a housing report using the 32312 zip code in Tallahassee could shed some light on an issue that is often reported incorrectly.

Real Estate Appreciation In 32312

First things first. Is real estate appreciation the measurement of change in the average sales price of homes? Most real estate reporters think so. Homeowners will find that this is not the case. Real estate appreciation (or real estate depreciation) is the change in value of homes between now and a previous period. For this to be accurately measured, we have to look at specific homes and compare recent sales prices (less any major improvements) to the previous sales price of the same homes. A way to estimate this is to compare price per square foot of homes in 32312 today with the price per square foot of homes in 32312 in the past.

Average Home Price In 32312 On The Rise

When we look at average home prices in 32312, we can see that they have been on the rise since October 2010. This certainly means that homebuyers are spending more money when they buy a home in the 32312 zip code, but it does not necessarily mean that there is evidence of real estate appreciation. When we look at the real estate graph below, we see the perfect example of falling home values during a time when the average home price is rising.

Home Values In 32312 On The Decline

The red line in the real estate graph above shows that the average price per square foot of homes sold in the 32312 zip code is still falling, even as many report the rise in the average sales price of homes in the same area. Often times, this is heralded as real estate appreciation and a turn in the housing market, when in fact it is merely homebuyers choosing to take advantage of low interest rates and "buy more home."

Home Sizes In 32312 Show Why Real Estate Appreciation Is A Mirage

When we track the change in the average size of homes sold in 32312, we can see the truth behind the issue of reporting prices as values. The reason that the average sales price of homes sold in 32312 cannot be relied upon for real estate appreciation reports is that the average home does not remain constant! Note in the graph below how home sizes have shot way up, while prices have only risen gradually. This masking effect is the cause of the faulty real estate appreciation reports that exist today.

When the economy changes, people change their buying habits. When interest rates drop, people are able to spend more money without raising their monthly payments. But this does not mean they are willing to pay more for a home than it is worth, it merely means they can spend more money. And that means they buy more home.

Supply and demand of homes for sale in 32312 will always control value movement, and right now the market is over-supplied for our current rate of demand. This means that values will continue to decline, and home sellers need to be prepared for a long recovery time. If you need to sell a home in 32312 right now, the best price you can expect will occur right away, as values are dropping and more expensive homes are "falling" to compete with yours every day. Take the time to sit down and discuss your options, because a little time invested now could end up saving you tens of thousands of dollars.

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