It's hard to believe it is October already! But waking up to 35 degrees on the thermometer this morning really got the message across that change is in the air and winter is right around the corner. But before we shift our focus to snow falling and ski resorts opening, let's take a look back at September and see what happened in the world of Big Bear real estate.
Comparing September 2012 to September 2013
As mentioned several times previously, because real estate sales follow annual cyclical patterns (i.e. In any given year, there are always more sales in August than there are in January.), it is beneficial to do a same month comparison for subsequent years. Here is how the September 2012 to 2013 market comparison looks.
September 2012 saw 108 home sales whereas September 2013 saw 113 resulting in an increase in sales of about 4%.
The average home price rose from $229,000 last year to $237,000 in 2013 representing a 3.5% increase. The median increased from $171,500 to $195,000, increasing by 14%.
The average price per square foot of a sold Big Bear home in September 2012 was $144 while this year's was $163 representing a 13% increase. Meanwhile, the median price per square foot rose from $138 to $159 representing a 15% rise in values.
Comparing Year-To-Date (YTD) Sales
Because one month's sales is a small sample size, it is also helpful to look at sales going back to the beginning of the calendar year. Here are how sales since January 1st of this year compare to sales during that same time period from last year.
From January 1st through September 30th, 2012 recorded 838 sales compared to 958 sales in 2013, showing a 13% increase in number of homes sold this year.
The average home price rose from $233,000 to $244,500 representing a 5% increase while the median rose from $165,000 to $180,000 for an increase of 8%.
The average price per square foot in 2012 was $142 rising to $160 this year for an increase of 13% while the median price per square foot rose from $131 to $147 representing a 12% increase in values.
Summary
Across the board, every price measure in both the month-to-month and year-to-date comparisons show improvement. The average and median sales prices show a modest increase around 5%-8% while the average and median price per square foot show increases of approximately 12%-13%. So which measure is the most accurate as far as how much the market has appreciated?
My opinion is that the more valid measure of market values are those that focus on price per square foot. Average and median home prices can be swayed by activty in certain price ranges. For instance, last year there were 5 sales over 2M dollars, whereas this year there has only been one. Last year's average sales prices would be swayed higher due to the high activity in the very high price ranges that has not occurred this year. But the price per square foot measures indicate how much buyers are paying per the amount of house the are buying. This seems to be a more accurate way to measure market direction.
That being said, if someone were to ask me how much the market has appreciated over the past year, I would compromise all these price measures while weighting the price per square foot measures more heavily and estimate a 10% rise in market values over the past year.
Outlook
The underlying fundamentals of a healthy real estate market are still present. Inventory of homes for sale is still remarkably low while our buyer activity is still higher than last year at this time. Interest rates have come down a quarter point in the last week after spiking up a full point in the last 2 months. This settling of interest rates may help keep the market going. Pending sales are still higher than last year at this time, so at least through the end of 2013, we should see continued appreciation.