- The Washington Times - Wednesday, July 5, 2006

May sales data indicates home prices in the Washington metropolitan area have generally held their ground during the market’s cooling period.

When the area’s housing market cooled off suddenly in the fall, many people worried that home values would plummet. They didn’t, due to the region’s low unemployment and healthy economy.

Prices didn’t plummet, but they did wobble a bit. In Fairfax County and the District, the median sales price for homes sold in May was down 1 percent compared to last year.

It’s important to put such data in perspective, however. If you compare the District’s median sales price for May 2006 with May 2004, prices are up 29 percent. And don’t forget that home prices throughout the region shot up 70 percent to 100 percent between 2000 and 2005.

So, it might be more accurate to say that home prices have reached a plateau after an aggressive climb upward.

Some jurisdictions have not reached that plateau yet because buyers are being drawn to the region’s affordably priced communities. May sales prices were up by double digits in Prince George’s, Anne Arundel and Baltimore counties, where homes are significantly more affordable than in Northern Virginia.

The region’s most affordable market, the city of Baltimore, saw median prices jump 27 percent over last May. The best performance a Virginia county could muster was the 7 percent increase Stafford County posted in May.

But, if you look at the right side of the chart, you’ll find that the picture looks a little more rosy when average prices are considered. If it’s average prices you are comparing, prices in the District were up 6 percent in May, rather than down 1 percent.

The problem is, average prices fluctuate more and are less helpful than median price data because the averages are easily swayed by a few very expensive sales. Median price data is less volatile, making it more useful than average price data.

Interestingly, the gap between average and median gives you an idea of the wealth disparity in an area. A big gap between the two means there are a lot of high-priced properties pushing up the average sales price.

Compare, for instance, the gap between the average and median in the District with the gap in Spotsylvania County. The gap is wide in the District, where you can find both affordable homes and some that go for tens of millions of dollars.

Contact Chris Sicks by e-mail ([email protected]gmail.com).

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