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Average sales price and why it’s down

Average sales price and why it’s down

Here we are, another year gone by! Of course, this means that it’s time to look back at the market last year and try to make some sort of educated guess as to what it means for next year.

The good news: the number of sales compared to last year has risen to 2006/2007 levels. The bad news: average sales price is down to $104,705 from $120,019 last year. I do not believe that this is because everyone lost 15% of the value in their home. The reason that the average sales price was down so much is because of the volume of homes sold below $50,000. Consider this chart:

Notice that although the total (shown along the bottom) is similar to years before 2008, the number of homes sold per price range is quite different. The number of homes sold under $50,000 went from 4% of the market in 2006 to 9% in 2007, then escalated to 23% and up to a staggering 29% of the market last year. This means that the homes in the “lower end” got hit quite a bit harder than the rest of the market. Areas that used to sell for $80,000 are now selling for $30,000 and have a large percentage of their sales be foreclosures. Investors are responding by getting in. In large volume.

What about “regular” homeowners? These numbers are almost exactly the same as last year, but about half of 2007. Trying to read how the first time homebuyer tax credit offered by the federal government has impacted us, it’s hard to say what it would’ve been otherwise. The $50,000 to $100,000 range did see a 500 unit increase which I believe to be much thanks to the credit.

So, what does this all mean for next year? I actually think we’ll see prices continue downward a bit more before they rebound. The needs of your family to have a home are more important than if this is the best time to “invest”. If you’ve been holding on, waiting for the market to rebound, it may be time to rethink that strategy as economists are predicting that if there is growth in the next few years, it will be very little.

I hate blog posts like this! I really prefer puppy dogs and sunshine. The good news – people are still buying and selling houses!! Things have not come to a screeching halt, it’s just different than it used to be.