Real Estate Article: Is the Market Really Slowing Down?
05/01/2006
Real Estate Article: Is the Market Really Slowing Down?
05/01/2006
I have mentioned before that the current Chino Valley Valley real estate market is going through a process of slowing down. The majority of the general public interprets a slowing market as one where prices are declining. That is probably why those of you who stay updated with housing statistics are a little confused. You’re probably thinking, “How is the market slowing down if median prices have been stable over the past 6 months?” In order to understand the slowing of our market you must understand the market from a professional’s perspective. I can answer that question for you.
Yes, it is true that there has not been any major change in the median prices of homes in Chino Valley Valley but there are other significant factors you need to take into consideration. Factors such as what types of properties are still being sold, how many, and how many properties aren’t being sold. The current unsold inventory index is extremely high and it represents two things. It means that the buyers have a large selection of homes to choose from and because of that, the homes that are actually selling most likely bring the greatest value for its price. It also means that there are a large number of homes that just aren’t selling for its current asking price.
If you were to compare the houses being sold 6 months ago to the ones being sold now, I am sure you would see a notable difference in the value of the property. The same property that sold for $600,000 dollars 6 months ago probably won’t sell for the same price today. The property that can sell for $600,000 today is one with more upgrades, better views, better landscape, etc. 
The inferior houses just add on to the unsold inventory index for the buyer to choose from. This means that prices are actually declining, not in terms of median price, but in terms of the amount of value required for your home to sell for the same price as it would have before. In addition the numbers of sold homes that make up that median price have dropped by nearly 20 percent when compared to the corresponding months of the previous year. The median price is taken from all the homes that are sold within a given month. If the homes that are sold are the best bargains and there are fewer homes that make up the median price, it is not surprising that Chino Valley Valley has maintained its median price. The market is indeed slowing down; you just can’t see it from the median price.
Given the situation of the current market, my advice to sellers is to be careful when thinking of your asking price. If you are going to compare your house to another recently sold property, make sure you don’t only look at the size and year but also the number of upgrades and features. If your property is lacking, you should adjust your price accordingly. If you don’t, you’ll probably end up contributing to Chino Valley Valley’s already large unsold inventory index. On the other hand, if you are a buyer, although prices might be declining, don’t let that scare you out of making your purchase. Waiting for prices to drop won’t be beneficial. You might save a small amount on your home but there won’t be any substantial changes as predicted by economists and realtors. With such a large selection to choose from it is still a good time to find that dream home you’ve been looking for.
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