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We have been asked: “Why do you put the median sales price on your just listed postcards and just sold postcards?” We hear that the majority of people like to use the term average. Average Sales Price doesn’t always accurately depict our real estate market areas.
When you’re buying or selling a home, you might evaluate the average sale price or the median sale price in your town. But what’s the difference between the two figures, and which number should you rely on as a valid measure of typical home prices in your area?
The average sale price is calculated by adding all the sale prices for homes sold in a specific town and within a certain time frame and dividing that total by the number of properties sold.
Average Sales Price Example: 29 homes sold in a Lincolnville Maine last year, the average home price would be calculated by adding the sale prices for all 29 homes and dividing that figure by 29. Which creates an average sales price of $345,924.
The problem with the average sale price is that if one or more properties were sold at a very high or very low price, the average becomes skewed by that higher or lower home price. The median sale price, on the other hand, is the sale price in the middle of the data set when you arrange all the sale prices from low to high.
The median sale price, then, represents the figure at which half of the properties in the area sell at a higher price and other half at a lower price.
Median Sales Price Example: Using the same 29 homes that sold in a Lincolnville Maine last year, the Median sold price is $240,000
Is the Median Sale Price or Average Sale Price a Better Figure? It’s beneficial to calculate both the average sale price and median sale price to help you determine the ideal listing price when buying a home. In the Lincolnville examples above there is an over $100,000 difference between the median and average sales prices.
When you list the current listing prices in your area or the sale prices for sold properties, you can easily determine if there is an outlier that could be inflating the average price calculation. It’s important to take into consideration all figures.
For more advice on how to make the most money from selling or buying a home, contact a Dwelling in Maine Real Estate Agent. We can walk you thru determining the best price for a property in Midcoast Maine.
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Over the course of the last thirty years, a shift has happened. An entire generation has been raised to believe that a college education is their key to unlocking opportunities that were not available to their parent’s or grandparent’s generations. Due to this, student loan debt has soared to $1.5 trillion and represents the largest category of debt, surpassing credit card and auto loan debt in 2010 and never looking back. As more and more Americans continue their education amongst rising tuition costs, this number will no doubt increase.
Many housing experts have blamed student loans for a drop in the homeownership rate for young families, and to an extent, they’ve been right. Increased debt at the time of graduation has no doubt limited young people from being able to afford a home at the same rate as their parents or grandparents did at the same age.
In a recent Forbes article, the author explained that “in just the class of 2017, the average student has about $40,000 in debt — almost enough for a 20% down payment on a median-priced home.”
The Federal Reserve set out to determine exactly how much impact student loan debt has had on the homeownership rate of those 18-34 (millennials). Their results found that “Every $1,000 in student loan debt delays homeownership by about 2.5 months, but it doesn’t prevent homeownership entirely.
In fact, by the time college grads reach their 30s, those with student loan debt have a homeownership rate nearly identical to those who didn’t take out loans.” (emphasis added)
In the Wall Street Journal’s coverage of the Fed report, they found that recent graduates prioritize paying off their student loans over saving for a down payment, despite their desire to be a homeowner. Many with debt want to “get that monkey off (their) back (before they) make any new investments.”
This has just delayed the wave of young home buyers from hitting the market. But as Danielle Hale, the Chief Economist at realtor.com warns, “2020 will be peak millennial, the year when the largest number of millennials will turn 30.” By age 30, those who attained a bachelor’s degree right after high school will be one or two years away from paying off their loans and will have been in their career long enough to earn a higher salary. In the long run, research shows that attaining a bachelor’s degree or more actually increases the chances that someone will become a homeowner.
Bottom Line If you are one of the many millennials who has prioritized paying down your student loans over saving for a down payment, you’re not alone. Even if you are a couple years away from paying off your loans, meet with a Dwelling in Maine real estate agent who can help you determine if waiting really is the best decision for you! |
In real estate, (especially in Midcoast Maine) the spring is often seen as the ideal time to buy or sell a house. The term “Spring Buyer’s Season” exists for a reason, as renters and those looking to move on from their current home thaw out from the winter and hit the market ready to buy.
According to Bank of America’s annual Home Buyer Insights Report, 41% of renters surveyed agree that spring is the best time to buy a home. The surprising result, however, is that when ranking the seasons, winter comes in second at 24%.
In many areas of the country, the spring and summer are the most competitive seasons for buyers. Here on the coast of Maine, we have our summer residents who add an increase and additional competition to this seasonal buying market.
Families with children often want to move over the summer to make sure that their kids are ready for school in the fall. This often leads those families who haven’t found homes to buy to push pause on their search in the fall and winter months.
This creates a great environment for buyers to find a home with less competition. According to moving.com, scheduling a move during the winter months also comes with the best price.
“If you define ‘best’ by cost then, generally speaking, you are more likely to save on a move during the late September to April window. Demand for movers usually slows down during this time frame and rates are low.”
There are also many benefits to listing your house for sale during the winter months as well!
As we recently mentioned, buyers who are out in the winter are serious about wanting to find a home, and there is traditionally less competition on the market which gives you greater exposure to those buyers.
As always, the best time to buy or move all depends on each individual buyer or seller’s goals and needs. If you are one of the many who would like to make a move this winter, contact a Dwelling in Maine real estate professional who can help you create a plan to make it happen!
In today’s market, where demand is outpacing supply in Midcoast Maine, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.
Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.
John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:
“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”
Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.
Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.
Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!
A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.
Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?
Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home. You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.
Many home sellers in Maine believe that spring is the best time to place their homes on the market because buyer demand traditionally increases at that time of year, but what they don’t realize is that if every homeowner believes the same thing, then that is when they will have the most competition!
Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months’ supply of listings from the National Association of Realtors.
As you can see, the ‘sweet spot’ to list your home for the most exposure naturally occurs in the late fall and winter months (November – February). This is especially true on the coast of Maine.
Temperatures aren’t the only thing that heats up in the spring – so do listings!
In 2017, listings increased by nearly half a million houses from December to June. Don’t wait for these listings to come to market before you decide to list your house.
At this time of year, only those purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers’ or casual summer buyers. The lookers are at the mall or online doing their holiday shopping!
If you have been debating whether or not to sell your home and are curious about market conditions in your area, talk with a Dwelling in Maine real estate professional who can help you decide the best time to list your house for sale.
Direct access from Route 1.
Rent includes heat & electricity.
Private kitchenette.
Elevator in building.
Very nice common area.
Private parking lot.
For more information, call-text Chuck Brawn at (207) 975-5139 or send him an email.
Calling all nature and Maine lake lovers! Rare opportunity to own 18+ surveyed and private acres with 793+/- feet of frontage on desirable Megunitcook Lake. This building site with old stone walls has been surveyed, cleared, underground power and generator hook up is in place, has septic design, waterfront set-back lines marked, driveway in place and trails to the waterfront set. This is the perfect opportunity to watch loons and other wildlife, boat from your dock, and have your very own private fishing hole. Bring your dreams and home plans!
FMI about the land at 49 Hope Road in Lincolnville Maine, please click here.
