Recent headlines have been buzzing about the median asking price of homes dropping compared to last year. That has sparked plenty of confusion. And as a buyer or seller, it’s easy to assume that means prices are coming down. But here’s the catch: those number don’t tell the full story.
Nationally, home values are actually rising, even if the median price is down a bit. Let’s break down what’s really happening so you can make sense of the market without getting caught up in the fear the headlines create.
Homes on the Market Right Now Are Smaller
The biggest reason for the dip in median price is the size of homes being sold. The median price reflects the middle point of all the homes for sale at any given time. And that’ll be affected by the mix of homes on the market.
To show you how this works, here’s a simple explanation of a median. Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median is 10 cents. If you have two nickels and one dime, the median is now five cents.
In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change. The same is true for housing.
Right now, there’s a greater number of smaller, less expensive homes on the market. That’s bringing the overall median price down. But that doesn’t mean home values are declining. And here’s the data to prove it.
Price Per Square Foot Is Still Rising
One of the best ways to easure home values is by looking at the price per square foot. That’s because it shows how much you are paying for the space inside the home.
The median asking price doesn’t take into account the size of different homes, so it may not always reflect the true value. And the latest national price per square foot data shows home values are still increasing, even though the median asking price has dropped.
That means that while smaller homes are affecting the median price the average home’s value is still rising.
So, while headlines may make it sound like the prices are crashing, you don’t have to worry. With a closer look and more reliable data, you can see that prices are still climbing nationally.
But it’s important to remember that home prices can vary by region. While national trends provide a big picture view, local markets may be experiencing different conditions.
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