I have always had a problem with how the media report sales prices, and in particular the reporting of an agenda – “Prices are going up, prices are going down, etc”
This story goes back to the late 80’s when I was working in the Inner West of Sydney, and took a call from a journalist – “I’m writing a story about how the market has gone up (1987-1988) and then gone down, and now gone back up again” she said. I’m looking for a house that has been sold 3 times in the last year or 2 and follows that pattern”, she said.
I told her that the chances of finding a property that had been sold 3 times in that time frame were slim, but “I”ve got one! However, it’s gone up every time.$180000-$185000 -$187000.” “Thanks anyway, that doesn’t fit my story”, she said. She’d already written her story, and was looking for facts to back it up!
Unfortunately, my distrust of the media, and in particular their reporting of the Real Estate market has forever been tainted by that day. Why am I telling it now? Because I have always said that the only true test of market movement is the “Same house selling twice within the test period…” Average prices, median prices, – they mean nothing! They are influenced by the quality of the places being sold in that period. But, if the SAME house is sold, with no alterations, well, that is the test.
So, last week, we had one. A house sold in December 2010 (at auction), and resold in February2011 (at auction, due to legal recission of the contract). The price achieved at the 2nd sale was 2% above the sale price achieved in December . So, while there is no way right now of saying how history will assess the market in this period, (up, down, etc), I want to remind you that each property is different and unique, and even the SAME property can sell for 2 different prices within a short period of time. You are dealing with a different pool of buyers, competing against different properties being sold at the same time, and other variables as well.
The moral of the story? The best way to find out the true value of a property in any market is via a well executed auction program – but you KNEW I was going to say that, didn’t you!