The news lately has been filled with housing price appreciation… With all the numbers flying around it's hard for the average person to make sense of what this all means. How does this affect me?! There are a few of scenarios you need to understand. First, is year over year price appreciation, second, price appreciation from the bottom, third, the number of units sold and lastly, prices as compared to the top of the market.
If you've been following the news, just about every week there are articles about how prices are up. A lot of these numbers are year over year appreciation for a particular month, say June, compared to June of the previous year. They also like to throw in the number of units sold, this is the number of units sold year over year, or sometimes month over month. If you don't read the article carefully, these numbers can be very confusing and misleading.
The following chart shows the median price of a home at the top of the market in Salt Lake City only. It shows the median home price at the peak of the market at $223,751. Four years later in 2011 we saw the lowest median price of $177,204. (these numbers are year over year starting in January and ending in December, except 2013 which will be year to date, June). A price drop of 20%. Some parts of Salt Lake County experienced closer to a 40% price drop, mostly newer construction south and west of the city center. See chart below.
Something I want to point out in this chart is where housing prices are so far in 2013. They are 10% lower than they were at the peak.
Below is an example comparing the number of housing units sold. This graph shows that the peak of the number of units sold was in 2005. A full 2 years before we started to see the housing prices start to fall. As you can see there was a 48 percent drop in the number of units sold, NOT price change…. this is big difference.
I also want to show you how housing prices in other parts of the country compare to Salt Lake City's. The following charts show the 20 city Case Shiller index. As you can see, every single city is still below their peak home prices, even though some have experienced over 20% appreciation!
Here is a map of the 20 city index for better visual comparison on which parts of the country are fairing better.
So, the question in the title of this blog is did you miss the housing price bottom? Yes you did…. The good news is that the market is far below the peak prices we saw back in '06 and '07. Should you be considering purchasing if you have been on the sidelines waiting? That depends on your situation, and only YOUR situation.
If you have any questions or comments, please let me know below…. What's the best situation for you now? Call or email me and we can schedule an appointment to review what is best for you.