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Mortgages Now At Lowest Rate for 2014 - Are Homes Appreciating in Value?
August 22nd, 2014 9:27 AM
Home mortgages are at their lowest rate for 2014. 

The 'calm' before the storm.  

The government will not continue with their market 'assistance' much longer. 

Inventory is decreasing and the median sales price is rising, as noted in recent reports by the research department of the National Association of REALTORS. 

Bottom line - fewer affordable homes are available to buy, more expensive homes are selling...median sales price is rising. 

This is different than saying the real estate market is appreciating - which some reporters use that term incorrectly.

1. The median sales price is rising = more expensive homes are selling which pushes the median sold price upwards

2. The market is appreciating = the same house which sold recently (a year or two ago) has sold again and it sold for a higher price the second time.  This is the only true way to track appreciation. Follow the same houses over time with their re-sales and determine by adjusting monetarily for changes to each re-sale(addition, garage, new bath, add AC, etc) what is the adjusted sales price by removing the dollar value of the sales market component of each change to the property from its most recent sale.  

If a two car garage was the only change to a home since it was last sold, then an expert on that local market can make adjustments to the most recent sale of the same property by deducting the local market value of a two car garage. The market value component of a two car garage connected to a sold house is not the same as the cost to build that two car garage. It is the 'value' buyers give a house with a two car garage over the same house without a two car garage and it is shown by the sold prices of both kinds of homes, all other value components being equal.

After any other market adjustments to the property it is a simple math calculation to determine if the most recent sold price has appreciated or depreciated.

This is the basis for tracking appreciation in a market.

It is not the median sold price - the median sold price is a reflection of inventory and which income bracket can afford to buy homes. 

The appreciation rate is a reflection of home prices rising because people are paying more for the same house over time (after adjusting for the value of home improvements). 

In our market the median sales price has fallen from 2013.. 



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Posted by Robbie Sharrett on August 22nd, 2014 9:27 AMPost a Comment

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