Home Values Are Rising Even as Median Prices Fall

Home Values Are Rising Even as Median Prices Fall

If you've seen headlines about home prices dropping, you might think the housing market is in trouble. But that’s not the whole story! Even though the median asking price for homes has dipped, home values are still on the rise. Let's break it down.

Why Median Prices Are Down

The median price is the middle price of all homes for sale, but that number can be affected by the types of homes on the market. Right now, smaller and less expensive homes are making up a larger part of the listings. This shift in size is why the median price has gone down—it doesn’t mean home values are dropping.

Homes Are Smaller, Not Cheaper

Think of it this way: if you had three coins, two dimes and one nickel, the median coin would be worth 10 cents. But if you had two nickels and one dime, the median would drop to 5 cents. The value of each coin hasn’t changed, just like home values haven’t dropped. It’s just that there are more smaller homes for sale right now.

Danielle Hale, Chief Economist at Realtor.com, says:

"The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further."

Price Per Square Foot Is Going Up

A better way to track home values is by looking at the price per square foot. This gives a clearer picture of how much buyers are paying for space. The national price per square foot is still climbing, even if the median price is down.

Ralph McLaughlin, Senior Economist at Realtor.com, explains:

"When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year."

The Federal Housing Finance Agency (FHFA) backs this up, saying the U.S. housing market has had positive appreciation every year since 2012.

Local Markets Matter

While national trends show rising values, each local market is different. It’s important to talk to a real estate agent who understands what's happening in your area.

Bottom Line

The drop in median home price doesn’t mean home values are falling. It’s just a reflection of the types of homes for sale right now. When you look at price per square foot, you'll see that home values are still climbing. If you have questions about home prices in Franklinton, LA, reach out today!