Tuesday, October 31, 2006

Halloween in Salem! It's a time for scary going ons in this city, but real estate isn't one of them. Though if you read some of the statistics that are out there for real estate sales, it may scare the bejeezuz out of you.

Just yesterday I was reading the single family sales for the first 9 months of this year in Salem MA compared to last year. The number of homes sold were almost exactly the same - 162 for 2005 and 160 for 2006 - statistically the same. The big difference is the average sale price - $359,500 for 2005 compared to $319,750 for 2006. I know what you are thinking - OMG, that's a almost a 12% decrease! The bubble has burst and the real estate market is in shambles!

But let's take a closer look at the figures. For an accurate look at the market, you have to compare apples to apples - or in our case, similar style and age homes. You cannot just take the total sales and make generalizations about what is happening with the market. Lets take a look at the sales for a specific home style. I'm going to use capes, because they were for the most part built around the same time - late 1940's through 1950's. I'm going to further break them down and only look at 3 bedroom capes. Now I could narrow it down even more by looking at square footage of living space, # of baths, lot size and neighborhood, but for this purpose just style and bedrooms will do.

In 2005, the average 3 bedroom cape-style home sold for $351,857. In 2006, the average was $339,900. This is a difference of just over 3%. Quite a bit of difference between this and the 12% published in Bankers & Tradesman. But it is a more accurate picture of the real estate market. The reason Bankers & Tradesman shows such a difference is simple - less expensive homes have been selling faster than more expensive homes. It not because the bottom has fallen out of the market.
Real estate runs in cycles, and we are currently going through a normal cycle. In every case the prices comes back up again and usually surpass where they were before the downturn. So is today a good time to buy a home? Yes, it's a great time to buy. Mortgage interest rates are still great, and because there are so many homes on the market, the sellers are willing to negotiate. Your best tool in this (or any) market is your real estate agent. Your agent will help you find the home that meets your needs, and will help negotiate for the lowest price.

So if you want a home, get off your arse (sorry, it's the Scottish in me), and make some appointments to see a few homes. You may even find your "dream home" (more on that in a later blog).


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