Understanding Home Prices

In real estate, home prices and home values are not always the same thing. "Price" is what someone asks for a property – it's the "list price", in industry jargon. Whereas "Value" is what someone will pay. HomeSalesStats.com allows you to see List Prices and List Prices per Square foot for sold properties. Understanding how list prices trend over time can tell you a lot about a property, like: 

1. How realistic are property owners and Realtors when it comes to setting home prices?

Are sellers pricing homes near to sale prices, thereby showing that they have a good handle on the market and are reasonable in their expectations? Are sellers pricing homes above sale prices, indicating that they're fishing for the best price for their home and they're not really motivated to sell? Or are sellers  pricing their homes below sale price, indicating that the market may be underpriced, or they're looking for auction style bidding?

2. Is the housing market declining?

Amazingly, you can tell that a market is in decline when sale price is significantly below list price. This shows that the market is exerting downward pressure on list prices and sellers are unable to hold their asking prices in the face of this pressure.

3. Is the housing market in recovery?

When a home sells for a - or above - asking price, it's a good indicator that a housing recovery is under foot. This means that the market is willing to pay more for a home than the seller is asking, and this dynamic fundamentally forces the values of homes to increase. An exception to this is when Banks and lenders sell foreclosure properties. You'll often see foreclosures selling for more than asking price were initially priced low to attract interest.

Spend some time on our online real estate statistics tool, looking at home price dynamics. You'll be amazed at what you learn. Or better yet, contact a real estate consultant in your area for data analysis and interpretation.