- The Washington Times - Wednesday, March 7, 2007

Home prices are a sensitive topic.

If you are shopping for a home, you hope for low prices. Falling home values are good in your mind.

If you are selling a home, you want prices to be rising, right? Maximizing your profit is your focus.

So what happened to home values last year? Did they rise or fall? Both.

It just depends on which numbers you are studying. That’s why statistics can be manipulated easily, depending on the story you want to tell.

If you want to encourage buyers that now is the time to buy because prices are down, the January-versus-June chart is the one to use. During the last two quarters of 2006, median sales prices dropped in every jurisdiction in the region.

There are at least two reasons for this: The real estate market is always slowest in the last half of the year. Less competition among buyers means less upward pressure on prices.

Another reason prices fell in the last half of last year is that it took a while for sellers to catch on to the new market dynamics. Today’s slower market began in the fall of 2005, but many sellers didn’t understand the shift right away and so they didn’t start pricing their homes competitively until later in 2006.

But the stats can tell another story. If you want to encourage homeowners and sellers that things aren’t really that bad, use the January-2007-versus-January-2006 numbers.

In that chart, you’ll find a few negative numbers but a lot of positive ones. That’s because the year-over-year figures include the spring 2006 market.

Home prices tend to rise in the spring because that’s when homes are selling most quickly. Buyers compete with one another for the most attractive homes, and many sellers never need to reduce their asking price because they find buyers first.

So, in the Washington metropolitan region, home prices most often rise from February through June. If prices are going to rise at all this year, that’s when it probably will happen.

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

The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.

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