On the dawn of the Astoria real estate bubble “bursting” sometime in 2006, the media told everyone that home prices would fall but don’t act just yet… Because they weren’t sure where the bottom was. Prospective buyers listened to the experts on TV and columnists in the national papers and waited for prices to plummet, ready to pounce on a great deal. I get a common question from almost anyone I talk to, when asked about the housing market here: How far have prices fallen? Have we hit the bottom yet?
I never give the answer that is expected. Sometimes I temper my answer with facts about the market place, why every real estate market is different, especially in Astoria, Oregon. Other times I just say “no, prices haven’t fallen and likely won’t.” Often the reply I get is a story about how a neighbor or friend of the inquirer sold their house recently, and had to reduce the list price several times to generate a sale. “If they reduced their price $25,000 then how is it possible that prices haven’t fallen?”.
Let me clarify a couple of things. There’s a difference between housing prices falling, and not pricing a home correctly for the market. When pricing a home for sale, you must use market data and recent solds to determine the correct sales price. Often, sellers listen politely to the presentation of the CMA by their agent and pick their price that is based on what they would like to net. Then, after several showings and many months on the market the price is reduced closer to market price and they get an offer. (hint: that’s why it’s important to price your home correctly, so you get an offer the first 45 days not after 6 months). Reducing your sales price to get the attention of the buyer is different than home prices falling.
I’m no expert on the economy (but I did stay at a Holiday Inn once) but median sales price of a home is a much better indicator of where prices are overall. The median sales price takes into account all sales at all price ranges. Let’s look at median sold prices for the Astoria, Oregon real estate market.
source: Clatsop MLS
- 2005- $189,450
- 2006- $237,000
- 2007- $242,450
I know what you’re thinking “wait a minute, prices went up during the last 2 years?”. Yep. I’ve been telling buyers not to wait, and this is exactly why. You see the public perception that prices are and will continue falling is incorrect, at least in our market. That is why it’s important to differentiate between multiple price reductions and falling prices. Rates are still low, and loans are available… Now stop watching Dr. Phil and go buy a house!
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