August Daytona Median Homes Price Drops to $164,000

How far have prices for Daytona Beach homes dropped since the real estate bubble burst? If you use median prices as part of the answer, you are off-base.

Median homes prices are cited as being something of great importance. Television news, newspapers and magazines are full of headlines shouting homes prices drop by X%. They are basing these screaming headlines on median home prices and that’s a big problem.

What exactly is the median price. First, it is not the average price. It is the point where one half is above the median and one half is below. For instance, if 200 homes where sold and 100 were below $200,000, and, 100 were above $200,000, then the median is $200,000. If in the next month, 100 were below $180,000, and, 100 were above $180,000, then the median would shift to $180,000.

Does this happen? Do the median value of prices shift from month to month? You betcha. In Daytona Beach condo and homes sales, here are the last four month:

August - $164,000
July - $185,000
June - $175,000
May - $175,000

Looks a bit like a yo-yo. Median prices do not tell us what home values are and to shout out headlines that say they do is inaccurate, and probably irresponsible. The median is a statement of distribution, not value. It’s value is as an indicator of the range of prices where people are buying, but without putting the metric in its proper place, it becomes expressed as something that it’s not.

OK, if median price is not a measure of value, what is? Despite people preferring to believe otherwise, the only true indicator of value is the agreement between a buyer and seller. Appraisers and banks attempt to determine value by comparing the property being valued to like properties in the area. This is exceeding difficult in this market, so they are being very conservative.

Note that, banks and appraisers would never value a property by relying on reported median sales values, so why would you? Nothing is totally reliable in any market, but in this market, if the appraiser states the value of the home at $200,000, that’s what the bank will accept and I personally would not pay more than that for the property.

Short sales and bank owned properties are determined using broker price opinions (BPOs) and appraisals to as part of their methods of determining values. Again, this is on an individual property basis. They are not relying on median prices reported by the media.

Your buying and selling decisions are a combination of emotional and economic decisions. I believe, right now, that there is a disconnect between buyers economic based decisions and seller emotional based decisions. Not in all cases, but in many, if not most.

So, for now, my advice is to get the best information available. That’s a combination of:

• Your personal and economic criteria,
• The seller’s determination of value (whether and individual or bank),
• The best information you can get from your Realtor who can do a reality check on the value by comparing what’s sold recently, experience, and trends within neighborhoods.

Whether you’re a buyer or seller, you need an experienced, active real estate agent. That’s where I can help guide you through the process. Give me a call at 386-566-7503 to discuss market options. I am very active with short sales, foreclosures and “normal” sales in the Daytona Real Estate market.

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