Why Recorded Sale Prices Inflate Market Realities
November 13th, 2007
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In my column for Realty Times this morning there is a discussion of recorded home values.
In many communities it would appear that despite a huge increase in foreclosures that home prices are pretty stable. This logically makes no sense if the idea of supply-and-demand is valid.
So why are reported sale prices so high?
As the column says:
“The average sale price in Montgomery County (MD) fell from $517,823 to $511,423.
“These numbers are no doubt accurate as far as they go, but they don’t go far enough. For instance, “seller contributions” are not reflected in recorded sale values but a 6-percent discount for a typical Montgomery home still amounts to more than $30,000.
“No less important, recorded data doesn’t tell us how many homes were listed but never sold.”
Speak with brokers in your own community and ask how sale prices are recorded. You can bet that discounts within sale prices are not reported, meaning that recorded sale prices are overstated.
The full column can be found at: Does The Mortgage Meltdown Impact The Rich?
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