I saw a presentation locally earlier this year by a well-meaning and experienced real estate professional, who was summing up the residential market for last year to a large audience of people. Among other things, they presented facts about the number of homes that sold and explained how the average price of a home that sold in Indianapolis declined somewhat. Since I follow these numbers myself, it wasn’t a surprise. But what did surprised me was the leap in logic when they equated the drop in average price as a decline in the average value of homes. Average sale price and average value are two different things altogether. Average price is figured by adding up the sale price of all homes that sold and dividing by the total number of sales. And yes, that did go down. But it doesn’t logically mean that the average value went down. It just means the mix of homes that sold changed with more lower price homes selling which brought down the average. If a larger number of expensive homes had sold, the average sale price would have been higher.
I really don’t think anyone really knows if home values went up, down or stayed the same here in central Indiana. On a case by case basis, some did and some didn’t. Truthfully, the market was definitely slower the last couple years with less homes sales, but that’s because a lot of people stayed on the sidelines to ride out the uncertainty and the media frenzy surrounding the “recession”. I frankly don’t think the downturn in the economy would have been half as bad if the media had just been more even in their reporting.
And now, here they go again. I was amused today by a report on the radio reporting now about a new wave of buyers now going after too few properties on the market…with offers from multiple parties bidding up the sale price over asking price. Where do they dig up these stories? I just know it’s not like that for most buyers or sellers. The truth is, even in the worst of times the last couple years, the market was still a good market. But lately, it’s improving. Even more expensive homes are selling more often than before. I’m looking forward to seeing what happens next.
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