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There are a number of techniques which can be used to determine the prevailing housing prices in a particular region. Whether people are buying or selling, it pays to know what housing prices are like in a given area, as this will have a profound impact on the sales price of a home. The bottom line and most important thing to remember is that current sales prices provide the best information, as houses can only sell for as much as people are willing to pay.
A number of websites compile data about housing prices and communities which has made the process of researching real estate values much easier. When a home sells, the sales price is entered into the public record, which means that it is possible to look up sales prices for a particular community, and to compare homes to get an idea of how much similar homes sell for. Sales history for specific properties is also available, for people who want to look at long-term changes in housing values.
Often, the difference between list prices and sales prices can be quite significant, and sometimes revealing. If homes consistently sell at prices above their listed prices, it indicates that the market is moving upwards, while a dramatic reduction in sales price when compared to list prices suggests that the market is following a downward trend. In addition to comparing list and sales prices, people can also get revealing information by looking at the list price history on a home: if homes sell right away, the market is strong, while repeated slashes in the list prices of homes in a community suggest that prices may be falling.
In many areas, homes either sell within the first 21 days, or they sit on the market for weeks, months, or even years. Looking at the sales prices of homes which move within 21 days of the time they are put on the market is often a very good indicator of prevailing home values, because these homes are usually priced just right. Some other key indicators are withdrawn or expired listings, which are usually priced too high.
Many governments also publish price indexes which reflect real estate values around the country. These indexes can be used to determine housing prices in specific areas, and to look at changes in the market. In the United States, this data is published in the Conventional Mortgage Home Price Index (CMHPI), among other places. Realtors may also be able to provide information about average prices and trends, although people should be aware that realtors want to make a sale for as much money as possible, so they may not always be entirely reliable.
When evaluating home values, people should also think about features which can influence price, such as amenities, the size of the lot, the condition of the home, and so forth. Two three bedroom homes rarely sell for the same price, and examining the differences between those two homes can be helpful in evaluations of home values. The home which sells for more money may have been sold with included appliances, a fresh coat of paint, a larger lot, or extras like a hot tub, air conditioning system, and so forth. Sellers are well aware that investing a small amount of money on staging a home can yield big returns when it comes to the day of sale, and this is something which buyers should be aware of as well.
Home values can also vary widely in a given community, especially if only a handful of properties are on the market. A single outlier can skew average prices way up or way down, and this is something which people should account for when they look at home values. Medians are often more reliable than means in the case of housing prices, as the median reflects the true “middle of the market.”