If you’ve been following the housing market over the past year, you’re probably thinking home prices are getting pretty cheap, attractive even.
But before you jump in, there’s something worth noting; the median home price you see plummeting is skewed.
Nowadays, most of the homes selling are either distressed properties or heavily discounted, while higher-priced homes and luxury properties aren’t moving.
The result is a median home price that’s well below year-ago levels, but in reality, home prices are still quite inflated.
In Southern California, the median price has fallen 35 percent from last March and 50 percent from its peak of $505,000 in mid-2007.
Recently, however, it has seen some stabilization, having stuck at $250,000 for the past three months after steadily dropping.
Unfortunately, newer developments with lower original prices are seeing more substantial price drops, while older, more costly (and appealing) neighborhoods have experienced less severe declines.
And with higher-cost home sales stagnant and 55 percent of March’s resales previously foreclosed on in the past 12 months, the decline in median overstates the decline in home prices.
So when you look at the median home price these days, understand it’s more a gauge of what is selling, rather than a reflection of the overall housing market.
That said, don’t be shocked to find your dream house being priced a bit higher than you expected.
Of course, there is a silver lining; home prices are seemingly more affordable because mortgage rates are lower, but that doesn’t necessarily mean it’s a good deal if you can get the same property a lot cheaper in six months.