Your Home's Value Didn't Rise 11% When Seattle Real Estate Prices Did

By
Real Estate Agent with SeattleHome.com -Coldwell Banker Danforth

Seattle homesAdding to the recent stellar news regarding Seattle's real estate market, this month's stats show another big median price increase compared to last year, and a continuing surge of home sales.  The median home price in Seattle rose 11.1 percent year-over-year in June, to $425,000.  Sales, at the same time, were up 13.2 percent compared to June of 2011.

Attention should be paid to the median price statistic, but this stat has to be taken with a grain of salt.  Your home's value did not increase by 11.1% in the past year if you live in Seattle. I emphasize this point, because it's easy to take any metric and broadly apply it without a lot of analysis.

Median home price increases certainly signal some gains in the value of an overall market but, in a recovery phase, they also have much to do with the category of homes being purchased.  To put it simply, people buy smaller, cheaper, less-risky homes in a downturn.  This pushes the median home price lower, not just because values are decreasing, but also because the "average home" being sold is just smaller.

When real estate markets hit an upswing, consumer confidence returns along with luxury and higher-end home buyers.  For a certain period at the bottom, median home prices will actually increase while true home values might be still sitting flat or even decreasing slightly.  The mid-point marker on the median home price statistic is still sliding upward as larger homes begin selling, but actual values take some time to begin their swing upward (we're likely past that point with many months of consecutive gains).

To put it simply, the median home price statistic tends to exaggerate the peaks and valleys of the market.  The downturns and the recoveries are more dramatic statistically than they are in reality.

Should that temper the enthusiasm for the recent increases?  Only to the extent that we don't start raising prices on homes for sale significantly.  In general, every real estate statistic we're seeing is as good as we've seen in years.  All signs point toward a recovery.  This is likely the best time to buy that we've seen in a decade.  It's just important to not allow a single statistic to color one's entire view of the market.  Prices in the Seattle area are likely on the rise for an extended period--your own home, however, is not worth 11% more than it was last year.

© Seattle Homes, LLC: - Sam DeBord, Managing Broker, Realtor
Coldwell Banker Seattle: Coldwell Banker Danforth & Associates
Twitter | Facebook | LinkedIn | Sam (at) SeattleHome.com

Data Source: NWMLS - The Northwest Multiple Listing Service did not compile or publish this information.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Location:
Washington King County Seattle Downtown
Groups:
Seattle Waterfront Real Estate - Waterfront Homes
Seattle Homes
Seattle Homes For Sale
Seattle Real Estate
Posts to Localism

Spam prevention
Show All Comments
Rainmaker
1,012,376
Adrian Willanger
206 909-7536 TheHomeFunnel.com - Seattle, WA
Profit from my two decades of experience

Hi Sam,

It does feel like we're in a recovery period in the Seattle market, thanks for clarifying the median price increase.

 

Best, Adrian

 

 

Jul 07, 2012 10:06 AM #1
Rainmaker
495,707
Rene Fabre
First American Title - Seattle, WA
New Media Marketing

Sam... Very well articulated! The Seattle market, even in good times, is very diverse and home values from neighborhood to neighborhood vary a lot. Even more complex in this post recession phase. I think you nail it by pointing out the bottom cycle with smaller home purchases, and when confidence grows, higher end homes see more activity. Nicely done, thanks for a great snapshot of our market. 

Jul 07, 2012 10:21 AM #2
Show All Comments
Rainmaker
199,884

Sam DeBord

Seattle Real Estate Broker
Ask me a question
*
*
*
Spam prevention

Additional Information