Homebuyers need to know what the houisng prices have done in the past in the neighborhood and area they are looking to purchase a home in. It can and does have an effect on the present value of the home you are looking to buy and what the future value of the home would be inf you decided to wait or wanted to sell in the future.
I give homebuyers a different array of statistics to look at. The normal trend is what has happened in that neighborhood over the past three to four months. This is waht the appraiser for the bank is going to look at. ideally, you would like to see three to four comparable homes sold in that time period. That is a good basis for the now. But what has the past trends been? Is the neighborhood having a high turmover rate? Are there a lot of foreclosures in the neighborhood? These are all factors that can affect the value of the home you are looking to purchase.
By past trends, I go back one year, two years and three years and sometimes four years. This will telll you home many homes sold and what the average price fo the home was that sold. It allows the homebuyer to see if there is a trend going down , up or remaing stable.
It allows them to see how many sold. Now, every neighborhood is going to have sales over the years. Some are going to be because of moving up to a larger home, downsizing or lifestyle change. But, the trends will tell you if there is an abnormal amount of activity in the area and neighborhood. And was it a one year wonder or a trend over a few years? If there is a high turnover rate in a neighborhood; you are going to want to know why...
Out of the homes that sold in the past, how many were due to foreclosure? Foreclosure prices in the past drove down the values of the homes in a specific area and neighborhood. What was once considered a rarity is becoming more the norm now. You want to know how many there have been. It will give you a good gauge of the stabiity of the neighborhood. It will also let you know if the pricing in the area has been skewed by the foreclosures.
Buying a home is going to be the largest single investment anyone ever makes in their lifetime. You want to ensure that the offer and ultimately the price you are going to pay for a home is a fair one. But, you want to know how that investment is going to do in the future. Eventhough we cannot predict the future; the past can give us some education as to what the future holds for us in value of the home...
Dave diCecco
Realtor/Broker
www.davedicecco.com
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