What Goes Up Must Come Down -- And It Is!

The media keeps reporting that the median sales price for single family homes is dropping. It seems like real estate writers keep using "median pricing" as if it was "average pricing". It isn't. The median only reports the mid-point in a series of figures. In other words, half the people paid less and half the people paid more for their property. The median is dead center, not average.

Despite this, I'll go along with the trend of using median pricing to illustrate that prices for single family homes in Pinellas County are indeed falling -- and that's a great reason for buyers to start making offers right now, and for sellers to get realistic about the prices they ask for their property.

I have data going back to 2003 and running through 2007. That's long enough since it covers the big real estate boom years and gets into the current market correction.

Here are the average median prices for each year (rounded to the nearest thousand):

• 2003: $180,000
• 2004: $206,000
• 2005: $249,000
• 2006: $222,000
• 2007: $206,000

As you can see, the prices appear to have peaked during 2005 and have been falling since then. In fact, as we start 2008, we are actually dealing with selling prices that likely track very close to selling prices from 2004. For what it is worth, I predict that these prices will continue to fall during 2008. Will they reach 2003's level? Sorry, the old crystal ball is a little cloudy on that issue.

Here's something to think about if you are a seller. If you bought your property toward the peak years, you might be in financial trouble now. The market is flowing against you right now. Market activity seems to be eroding the value of your investment, and that erosion might continue. The longer you wait to sell, the less value your property may have. If you want to sell it, you might want to consider pricing it at it's correct market value now and get out while the gettin' is good. The longer you wait, the larger your potential loss. The other option? Hold your property and hope for an improved market sometime in the future.

If you are a buyer, this may be a great time to make offers. Prices are probably near the 2004 level today. I don't know how much lower they will go, but I'd frankly be surprised if they go all the way back to 2003's average median. You may be near the market bottom now. If you buy now, you may suffer some short-term paper losses if prices drop a little more, but most likely the value will increase within the next few years and you'll be okay. If you're buying for the long-term (which is how you should look at a real estate investment) it won't matter much to you anyway. In other words, NOW is a great time to buy.

By the way, when did the market actually peak? Based on the median price data, it appears to have been in October, 2005. The median selling price for a single family home in Pinellas County hit $276,000 in that month. Where is the median today? Try $185,000. What goes up ...

For more information on real estate in Pinellas County, visit my website at http://www.thestpeterealestatesite.com/.

-30-