Real Estate in Williamson County what is the market doing in March 2011
Just had a great conversation and gained huge insight from a local newspaper editor that wanted to chat with me about the Real Estate Market. Her question was how can the average sales price of a home in Williamson county now be higher than the average sales price in 2005. To a layperson that may indicate to them that they could sell for more now than they did in 2005. I don’t want to give away any of her upcoming article topic but I want to address a few things when looking at real estate statistics.
Lets first talk about Average Sale Price versus Median Sale Price.
Take the following example:
Five Houses sell in a period of one month.
Priced as follows: $100,000, $200,000, $300,000, $400,000, and $1,000,000
The average (add them together and divide by the number of units sold (5)) is $400,000, while the median (the middle unit, where 50% sold above and %50 sold below) is $300,000.
With a $100,000 separation in the two numbers and the diverse real estate market that exists in Williamson county , I suggest that you should always be comparing the Median home price fluctuation. Imagine how the sale of a grand estate such as Alan Jackson’s ($28,000,000) property sale had on the average during that month. We are truly blessed to have such a diverse surrounding in the county and must be aware of the impact it has statistically.
Now lets look further at how a trend can be misinterpreted as an indicator of stronger pricing. Even in analyzing the Median you must also consider what products are being purchased. For example the median could rise because the trend is to buy bigger houses. I would contest that the median sale price is rising now because the higher priced homes are more of a value now than they were 5 years ago. There are short sales and foreclosures in the higher price points that did not exist as frequently a few years ago. So how do you struggle with this number statistically. I look at the fluctuation in price per square foot to see how it is changing as an indicator of market recovery.
I also create this proprietary Total Market Overview each month that shows me the months of inventory and the pending ratio. Simple Economics will tell you from those numbers that price is declining when there is more supply (months of inventory is going up) and the pending ratio tries to predict that inventory going up or down in the next 30 days.
If you find these numbers interesting and want to talk more about the Williamson County Real Estate market please feel free to contact me at 615-587-5843.
Also look for Mike Grumbles to be quoted again in the future in an upcoming Real Estate story.
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Williamson County Real Estate Agent
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