Many people would like to start building equity in their own home, but are held back by concerns about cost. Media reports of housing prices can give a misleading impression about the cost of home-ownership. The media typically reports median or average prices without explaining the distribution of home prices behind those figures.
A median price is the price at which half the homes sold for more while half sold for less. That means that there are just as many homes that sold at a price lower than the median than those that sold at prices higher than the median price. The median price doesn’t give any indication of the spread of these prices. Many properties are sold at much lower – and higher, of course – prices than the median price.
An average price is the total dollar volume of homes sold for a particular period, divided by the number of units sold. Average prices are typically reported for the sales activity in a given area for a given month, quarter or year, and provide a snapshot of past activity. Average prices of properties sold in the past give only a limited indication of what housing inventory for sale is priced at today. An understanding of the housing in a particular community is needed to put average prices into perspective. For example, sales of a new sub-division or townhouse project of larger, upscale homes at higher prices will bring the overall average price up, giving the impression that all housing prices have risen, when in reality, prices for the other housing units in the community have not changed, or they may have even dropped.
The Fraser Valley Real Estate Board was the first real estate board in Canada to offer a housing price index (HPI) which tracks the price of a typical, or benchmark property. HPI statistics can often provide a new depth of interpretation to average and median statistics.
Low mortgage rates combined with affordability and selection have made Fraser Valley communities increasingly popular for buyers. A REALTOR® with experience in the community in which you’re interested in buying can provide a knowledgeable market analysis and show you what is available within your budget.
Ask a Fraser Valley REALTOR® for details. You may well find that you can afford that dream of home ownership, after all.
Information courtesy of Fraser Valely Real Estate Board.