Face tattoos and seeing the full picture in real estate

appraiser with face tattooIf you ever plan to get a tattoo on your face, call me first. That’s what I tell my two sons. They always roll their eyes and laugh at me when I say this. Of course I’m joking in part because they’re only 8 and 10 years old. But there is still a truth here nonetheless. It’s a good idea to get an outside perspective before making a big decision. There is something about consulting with a friend, family member, professional or even Facebook contacts to help weigh a decision and understand what to do. The same holds true in real estate when it comes to grasping the way the market is moving. When we dig into several different trends instead of just one, we tend to get a more balanced or holistic view of real estate. What do you see in the graphs below?

median price average price per sq ft average sales price in sacramento county by sacramento appraisal blog

median price average price per sq ft average sales price in sacramento county since 2009 by sacramento appraisal blog

median price average price per sq ft average sales price in sacramento county since 2013 by sacramento appraisal blog

Why a Full Picture Matters: All of these metrics generally show a similar trend at any given time. However, you’ll notice sometimes the trend lines get closer together and other times they are further apart. There are also moments when one metric might have a slightly more aggressive uptick or downturn. What does this tell us? If we rely on only one trend to interpret the market, we might not get a full picture of how value is really moving. For instance, when looking at February to March 2013, we see the Median Price increased by 8.5%, Average Price per Sq Ft increased by 2.9% and Average Sales Price increased by 6.9%. So how much did value actually increase during this month? Can you see how blindly choosing one metric might get us into trouble? We cannot simply put all our eggs in the median price basket (or any one trend) to interpret the market.

DISCLAIMER: This post was in no way meant to offend anyone who has a face tattoo, will have have one or used to have one. Be happy in life.

Questions: What do you tend to look at most in real estate? Median price, Average Price per Sq Ft or Average Sales Price?

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