I heard it on the radio, so it must be true, right? The National Association Of Realtors (NAR) is running a series of radio ads in order to increase the public's perception and awareness of how and why buyers and sellers benefit by using a member of the National Association Of Realtors. In and of itself, that is a noble cause, Lord knows we sure could use some help.
In order to bolster the idea that real estate is in fact one of the best investments we could make as a way to build wealth, one of the statements the NAR is making: "On average, the price of a home doubles every ten years." Another: "Over the past 30 years, home values has risen more than 6% annually".
I am sure the keepers of the data can probably support those statements with sales price data collected and presented as fact. For the nation as a whole those figures are probably accurate.
However, if you live in Ohio, and especially Stark County, please, PLEASE don't believe that statistic applies to our area. Data collected by the Ohio Association of Realtors (OAR) shows that the increase in Ohio for property value (average sales price) has only risen about 3% per year since 1998, or roughly half the rate that NAR has been citing. Officials at OAR are asking NAR to change the language in the radio ads so as not to mislead the general public in Ohio. Should they hear these misleading ads and believe those statistics apply to our own area, of course they would be misinformed. OAR in fact points out that there has actually been a decline in the average sales price for single family residences of 2.4% for the year 2007.
In actuality, average sale prices for Stark County are even lower than the 3% average for the State. I haven't tracked the data for the years 1998 and 1999, but for the period 2000 through 2007, only two of our 21 areas that make up Stark County have had an average annual price increase of greater than 3%. Those areas being Lake/Hartville/Uniontown and Tuslaw. Several or our areas are at a paltry 1% and even lower.
The real message is that real estate statistics are local in nature. Be sure to ask your Realtor about your particular neighborhood.
For those desiring a report on their area, please email me and I would be more than happy to provide the general trend for your area.
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Hi Tony - Thanks for your post! The figures from the search that you conducted were remarkable. Let me set up the same search in the local MLS for 4 bedroom homes in Uniontown for the years 2003 to 2008 and see what type of return I get on that.
As far as advising to buy or not to buy? All I could do would be to provide facts on which you could base a decision. Many buyers are like yourself and hesitant to purchase right now, understandably so. (Fueled by the major news articles contributing to the fear of a still falling market.)
There are tons of good reasons why one should buy now. Yes, the market could correct even farther, but if you will be purchasing real estate for the longer term, one should have reasonable expectations that prices will continue to rise. Like the stockmarket, the overall trend through the decades is up. It is very difficult, and probably impossible for anyone to time either the stock market or the real estate market to hit the dips in the corrections?
Tony- Statistical Search for sale prices of 4 bedroom homes in the area of Lake/Hartville/Uniontown.
Avg sales price in 2003 was about $213,000. It peaked in 2007 at $221,000 So far in 2008 - $199,700
Median sales price in 2003 was about $184,000. 2007 was about $202,000. So far in 2008 - $222,000!
Interpretation: When charted, the average sales price as well as median sales prices for 4 bedroom homes closely resembles the chart for sales prices for the entire state, or for Stark County. Slow upward trend, falling off between 2007 and 2008. (Except for the spike so far in 2008, but keep in mind not many homes have sold so far, so the sampling is relatively small in number.)
If you could share with me the search engine and parameters that had returned the 146%, I would enjoy taking a look at it myself. Perhaps they sampled one subdivision in a "bedroom community" of new homes?
Tony - Thanks for the update on the search that you used. It is much appreciated. I will attempt to duplicate that search and compare the addresses of the properties returned, and try to figure out why there is such a difference.
As far as being a good time to buy, I could list the same often duplicated reasons why it is a great time to buy such as interest rates being at a 45 year low, buyer's market, yada yada. Those lists abound.
Philosophically speaking, there is a large element of truth in the idea that "Today is the only day we have", and that tomorrow is promised to no one. If you are able to purchase that four bedroom now when you have need for it and can enjoy it, if you do not do it now, then when will you do it? Under a scenario of waiting until prices rise once again during a seller's market, you'll be paying more for your property then, and having fewer years to need it and enjoy it for your household members. Will some of the family members be leaving the nest in the next few years?
I've always been a fan of Peter Lynch (the stock market guru) who was at the helm of the Fidelity Magellan Mutual Fund. He authored some fabulous books about investing, such as One Up On Wall Street. He made billions of dollars for his funds while maintaining the adage "The herd is always wrong." He said if everyone else is selling, he would be buying at discounted prices. When everyone else was buying, he would be selling at a profit.
As a REALTOR, I cannot give investment advice as that comes under the auspices of accountants, tax planners, and investment counselors. But I do admire Peter Lynch's theories and believe they have a lot of validity, at least from my own experience.
It's great chatting with you Tony, thank you for the thought provoking and stimulating conversation!