Disclaimer on Average Sales Price

You are going to see this figure quoted again and again in real estate writings, and rather than put a bracket after it every time I’m going to link to this quick post.

It’s a figure we track because it gives us a great OVERVIEW of the whole real estate market, but it can very easily be skewed.

The Average Sales Price is a very POOR indicator of YOUR HOMES WORTH/GROWTH in VALUE.

To highlight this let’s take a look at $1,000,000+ properties that sold in 2012.

12 sold in the month of February 5 sold in May (the highest sales month of the year)

Guess which month had the highest Average Sales Price?

You got it! February was up 10% in 2012 over 2011…so while the average price is a great indicator from year to year of how the market is doing, it’s not a simple formula of Average Sale Price = Increase in your homes value.

Does that make sense?

This effect is even more prevalent in areas/times that have fewer sales, say you have a community where 2 or 3 homes sell in a month, the average sales price can fluctuate radically from year to year.