Friday, July 6, 2007

Everyone wants to know about home prices these days, and who can blame them? Rising or falling home values not only impact individual pocketbooks, but a region’s entire economy.

Typically in the Washington metropolitan area, the spring real estate market is very active. So it shouldn’t surprise you that the spring is when home prices tend to rise.

Did that happen this year? Is it possible for home values to rise when home sales are so stagnant? The results surprised me. In the charts comparing January 2007 to May 2007, there are only a handful of negative numbers. Prices were up in most jurisdictions and, in a few places, prices actually rose by double digits.

So what about that slow market everyone’s talking about? How in the world could home prices be rising this year? Well, they had to fall a fair bit first.

The other chart shows median prices in May 2006 compared to December 2006. You’ll quickly notice that prices fell during the latter seven months of 2006.

Prices were down 5 to 14 percent in Virginia. Results were mixed in Maryland, with prices flat in some places, down in a few and up in others.

I must caution you against drawing too many conclusions from this monthly data, however. Home price data for a single month is very susceptible to fluctuations caused by the sale of a few very expensive or very inexpensive homes. Those fluctuations even out in annual data, making 12-month data preferable for serious analysis.

Also, you should remember that the homes sold in May were different homes from those sold in January or December. These numbers do not track the values of individual properties.

I’m aware of only one organization that tracks the sales prices of the same properties year after year. The Office of Federal Housing Enterprise Oversight ( publishes this kind of sales data each quarter, but only on the state level.

Its most recent release offers some more surprises about area home prices. According to OFHEO data, Virginia’s home prices in the first quarter of 2007 were up 5.5 percent compared to the first quarter of 2006. Prices were up 6 percent in Maryland and the District.

How could this be? Remember that the OFHEO data is statewide, so it includes such places as Baltimore, where home values have been climbing aggressively.

Chris Sicks

Contact Chris Sicks by e-mail (

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