Is today’s red-hot market overpriced?
How much – if any – is today’s existing home sales overpriced is a question on the minds of buyers, sellers, and real estate professionals. It’s a question that will remain unanswered until current conditions stabilize. One way to visualize where we are is splitting the market in half with a comparison of the median sales price to the cumulative appreciation price since the last year with balanced market conditions – in this example, 2017. That’s when the market had six months of inventory.
The median sales price for the first five months of this year is $156,500. The annual median sales price for the benchmark year was $135,100. The cumulative appreciation from 2017 to 2020 at the local average appreciation rate of 3.5% is $149,788.
That puts this year’s middle-market sales price at almost $7,000 above what it would have been had market conditions remained balanced and constant through the end of last year. That’s a cumulative appreciation of a little better than 3%.
So, half of the homes currently being sold in this red-hot market could still have a little room to grow based on comparison to the benchmark year. That’s not the necessarily the case for the half of sales above the median price point.
May’s median sales price was $190,000 – the third highest so far this year. The listing price of $217,950 was the highest so far this year and $27,950 (12.8%) higher than the sales price.