When people ask about real estate market conditions, generally the subtext is that they are really asking what things will be like six months or a year from now. Of course statistics can only tell us what has already occurred.
Despite this inherent shortcoming: A sound statistical analysis can still give us a valuable perspective on trends. The most straightforward analysis would be to compare current year-end figures with last year’s; and to compare local trends with national trends.
Statistics never fit into perfect theoretical models: In fact statisticians know that if a report of the results of 100 coin flips do not have a string of 6 or 7 head or tails in a row, then the results were probably faked. But this year, our real estate statistics have certain unexplained, anomalies too great to shrug off.
Median home price in the past year went down 3.4% nationally, down 8.78% in Windham County, and up 4.21% statewide. Generally, Windham County and the state as a whole have followed national trends, only with considerably less magnitude. When national home prices were down 30%, for example, Windham County prices tended to be down 5% – 10%.
But last year’s precipitous drop means that Windham County median home prices have now fallen by greater than 15% from their peak. That is still just under half of the national percentage drop, but that is a dramatically different picture than in years past.
Anecdotally, this past year I have been surprised at how much lower asking prices often were, and I have also seen that buyers are particularly firm, so that in many instances if a seller wants a deal, they must compromise a lot or else end up with nothing. OK, so Adam Smith’s unseen hand is at work, but why so strongly in Windham County?
Where is local residential real estate heading in 2012? I am planning to write about that with great accurancy in 2013.