Guest columnist: Jim Lee
If you’ve seen recent headlines about falling median home prices, you might wonder if values are declining. But here’s the truth: home values are still on the rise, even if the median price appears lower. Let’s look closer to understand the bigger picture.
Why Are Median Prices Falling?
The main reason for the dip in median price is the mix of homes on the market. The median price simply means the middle price of all listed homes, and lately, smaller, affordable homes are available. This increase in smaller listings pulls the median price down, even though the value of individual homes hasn’t changed.
Example: Picture three coins: a nickel, a dime, and another nickel. The median is five cents because it’s the middle value. Swap one nickel for a quarter, and the median changes, but each coin’s actual value remains the same.
In both cases, a nickel is still worth five cents, and a dime is still worth 10 cents. The value of each coin didn’t change. The same is true for housing.
Right now, there are a greater number of smaller, less expensive homes on the market, which is bringing the overall median price down. But that doesn’t mean home values are declining.
This same concept applies to real estate. As more smaller homes hit the market, the median price may dip, but home values—especially measured per square foot—are rising.
Price Per Square Foot is the Key Metric
Looking at the price per square foot reveals the true trend in home values. This metric is increasing nationally and locally, which shows that even if smaller homes are influencing the median price, property values continue to grow.
What Does This Mean for You?
While the median price may be down due to smaller homes on the market, overall home values are rising. However, real estate trends can vary by region, so it’s best to consult a trusted local agent to understand the market in Portsmouth, NH, and the New Hampshire Seacoast.
Bottom Line
A drop in median price doesn’t mean home values are falling. Instead, it reflects more small homes in the market mix. For a true view of value, focus on price per square foot, which is steadily rising. If you’re curious about home prices in Portsmouth, reach out to Jim Lee and Ann Cummings, Portsmouth NH Realtors, for insights tailored to your local market.
