Lately, you’ve probably seen headlines talking about the median asking price of homes dropping compared to last year. This kind of news can cause confusion for buyers and sellers alike, making it seem like home values are falling. But here’s the deal: those headlines don’t tell the full story, especially in a market like Brookings, South Dakota, and the surrounding areas.
While it’s true that the median price has dipped, it’s important to understand what that really means before you jump to conclusions. Let’s break down the details so you can navigate the housing market with confidence, whether you're looking to buy or sell.
Why the Median Price is Lower—But Home Values Are Still Rising
The key to understanding this trend lies in the types of homes being sold right now. The median price reflects the middle point of all the homes on the market at any given time. When more smaller, lower-priced homes are listed, the median naturally drops. But here’s the thing: that doesn’t mean home values are going down.
Homes on the Market Are Smaller Let’s make sense of this with a simple example. Imagine you have three coins—two dimes and one nickel. If you line them up by value, the middle one (the median) is 10 cents. Now, replace one dime with another nickel. The median drops to 5 cents. Did the value of the coins change? Nope, just the mix of coins. The same concept applies to the housing market.
Right now, the market is seeing more smaller, less expensive homes being sold, which is dragging the median price down. But, as Danielle Hale, Chief Economist at Realtor.com, points out:
“The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further.”
This means while the median price has dipped, home values are still holding strong, and in many cases, rising.
Price Per Square Foot: The Better Measure of Home Value
A better way to gauge the value of homes is by looking at the price per square foot. Why? Because it reflects what buyers are paying for the actual space inside the home.
While the median price only shows you the middle point of all homes listed, it doesn’t take into account the size differences. Looking at price per square foot gives you a more accurate picture of how much homes are really worth.
Recent data shows that even though the median price has dropped, the price per square foot has continued to rise. This indicates that home values are still increasing, even if the headlines might make you think otherwise.
Ralph McLaughlin, Senior Economist at Realtor.com, explains it this way:
“When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year.”
In other words, smaller homes are pulling the median down, but the average home’s value is still going up.
National Trends vs. Local Markets
Now, while it’s helpful to look at national data, keep in mind that the housing market can vary significantly by region. What’s happening on the national stage might not match up with what’s going on in Brookings, South Dakota, or the nearby areas of Volga, Aurora, or Elkton. National headlines can only give you the big picture, but the local real estate market could be experiencing very different conditions.
In fact, according to the Federal Housing Finance Agency (FHFA):
“Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.”
This tells us that home values have been on the rise for over a decade, and that trend is likely to continue, even if the median price fluctuates.
If you’re wondering what’s happening in your specific neighborhood, the best way to get accurate information is by working with a local real estate expert who knows the Brookings market inside and out. They can give you a detailed analysis of current trends and help you make informed decisions whether you’re buying or selling.
What Does This Mean for Buyers and Sellers in Brookings?
If you’re thinking about selling your home, don’t let the headlines scare you. The drop in median price doesn’t necessarily mean that your home’s value is falling. Instead, focus on the price per square foot and other local factors that can affect your home’s market value.
As a buyer, this market might present opportunities for you to find a home at a lower overall price, but keep in mind that home values are still increasing in terms of price per square foot. If you’re looking for a smaller home or a more affordable option, now could be a good time to jump into the market.
In either case, the smartest move you can make is to partner with a real estate agent who has a deep understanding of the Brookings housing market. At the Brookings Home Team, we keep our finger on the pulse of the local real estate trends so we can guide you through every step of your transaction with confidence.
Bottom Line
While recent headlines might suggest home prices are dropping, the reality is that the median price has fallen due to a greater number of smaller homes hitting the market. Home values, however, are still rising—especially when you look at the price per square foot.
If you have questions about what this means for you in Brookings or the surrounding areas, don’t hesitate to reach out. We’re here to provide you with the facts and help you navigate the local market, whether you're looking to buy or sell.
Posted by Shane Andersen on
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