This Northwest Arkansas City Ranks #9 of 772 Markets for Most Overpriced Homes in America...
/You gotta love these lists that predict doom and gloom for home buyers and sellers across the United States. This one, from GoBankingRates website, has a list of the top 50 most overpriced markets in the US.
“Buying a home can either be a great investment or a money-draining liability. And while there are safer bets than others, no one can predict all the ebbs and flows of the housing market. What can be said with certainty is that the houses in certain cities carry price tags that exceed their actual value. To learn where exactly this is in the case, we turned to a new GoBankingRates study that identifies the 50 cities with the most overpriced homes in the U.S. Using housing 2019 data from Zillow, GOBankingRates analyzed the 722 biggest housing markets in the country. For each city they took the Median list price and compared it to the Median home value to see where the largest difference in price and value was found. Read on to discover which city has the most overpriced homes in America.”
So what is the real story? Can you really take data from a third party company and determine your home value vs market price? The short answer is no.
With many companies a proprietary algorithm is used to determine what they believe to be the market value of your home. This figure can be a range of several thousands of dollars and is supposed to give you a good representation of your true value; many people fully believe everything they read on the internet, especially something as complicated to the layperson as real estate value. But is it in your best interest, as a layperson. to rely on a computer program to determine the value of your biggest asset?
Let’s take the Rogers example given, but we can assume this is the case for all of the Northwest Arkansas Metro. The company doing this list states that the median list price is $321,854.75 and the median home value is $184,960, which they indicate is $136,894.75 overpriced. They clearly state in the article that they used 2019 numbers, two years old and stale numbers if you are familiar with our market.
Let me tell you something first: asking ain’t getting. List price has little to no meaning in determining value. You can ask anything you want for your house, a million dollars or a dollar…asking isn’t getting. The best way to determine - and the way your Realtor will determine - value is to look at the market overall, listings, pending sales and sold listings over a set time period. If you look at the sold listings in Rogers over the last six months, you’ll find that the median list price was $277,500 and the median sold price was $276,000 - that amount is perfectly balanced, 100% of market price. The median price of listings currently on the market is $394,560 and the pending sales are at a median of $331,250. What does this tell us about your home’s value? Nothing. Yet. What it shows is a trend. Median sales over the last six months were $53,750 lower than today’s pending sales.. But this still doesn’t indicate SOLD price. Not until they close can you determine this month’s trend. Can you tell what the actual trend is from looking at a third party site? Nope. But I can. As a Realtor, I have immediate access to this information.
Sales in the last 30 days are at a median of $269,900 list
30 to 60 days ago - $264,995
60 to 90 days ago - $279,000
90-120 days ago - $296,000
120-150 days ago - $262,900
150-180 days ago - $279,950
So what do we see? The overall market over the last six months in Rogers is steady. Homes are selling at nearly 100% of list price. If the pending sales price of $331,250 hold to be true then that would be a huge jump in median price over the course of a month.
But there is so much more to determining your home’s value. The price per square foot in one neighborhood is far higher than in others. A median price for the entire city gives you very little insight into your home’s value. Rogers has homes scattered over a huge area, from Beaver Lake to Cave Springs, with all sorts of variables. You have to study the prices in relationship to similar homes that have sold - not that are listed - in order to determine value. This is exactly what a licensed appraiser does, and what a Realtor does for you on an informal basis. We cannot, by law, determine an appraised value if not licensed to do so.
Let’s look at a city overall, then. If you are selling homes at a modest pace at a stated price then the value of your home is pretty well determined by that price. But let’s say a new subdivision comes online and starts selling homes.
Here’s a quick refresher from Wikipedia on the meaning of Median:
“In statistics and probability theory, the median is the value separating the higher half from the lower half of a data sample, a population, or a probability distribution. For a data set, it may be thought of as "the middle" value. The basic feature of the median in describing data compared to the mean (often simply described as the "average") is that it is not skewed by a small proportion of extremely large or small values, and therefore provides a better representation of a "typical" value. Median income, for example, may be a better way to suggest what a "typical" income is, because income distribution can be very skewed.”
So then we can say that median price is the typical home price not skewed by a few high or low numbers. But if you add a subdivision with 30 or 50 homes at a price $50,000 above the current median - and you have ready, willing and able buyers for those homes - then the median price goes up. Maybe it’s short term if the number of homes is limited. But in our area, with new subdivisions coming online nearly every month, this median price will continue to rise.
Confused? Naturally. Real estate is complicated and it involves one of the biggest investments you make. It can’t be determined by entering in your address and getting a result that you can bank on. It is so much more.
Here’s the bottom line: Use a Realtor. IT COSTS YOU NOTHING TO ASK QUESTIONS! Many people don’t like salespeople and real estate salespeople can be persistent. But the good ones pay attention to your needs and act accordingly. I answer calls, emails and texts. If you don’t want to be bothered by marketing just say so; I don’t send unsolicited marketing but I know some do. They won’t if you tell them not to. The goal is to find you the ideal home for your family or to get the best market price possible from your home. Realtors who list your property for you collect their fee from the seller, but not until you sell. If you are looking for a home, it costs you nothing to look. It costs you nothing to ask questions about your home’s value, about the value of homes you are considering buying, or about anything related to real estate sales.
We can help you sort through the tremendous amount of information to be found online about local real estate. Don’t make a possibly costly mistake by trying to figure the current market out on your own. An experienced Realtor can sort it out for you. I’ve been in the business for 34 years now and I feel like I have a grip on the market. 479-903-0328.
LInk to the original article at This City Has the Most Overpriced Homes in America | Best Life (bestlifeonline.com)