Real Estate Pricing

Real estate pricing deals with the valuation of real estate and all the standard methods of determining the price of fixed assets apply.

The median home price is one of the most common measurements mistakenly used to compare real estate prices in different markets, areas, and periods. It is said to be less biased than the mean (average) price since it is not as heavily influenced by small number of very highly priced homes. However, this is not true. Actually, it is more biased than the mean because it is more easily influenced by abnormalities in the market, such as an extraordinary influx of say, low-selling foreclosure sales prevalent in an economic downturn. ( The statement made up to this point by the previous author is completely false, by statistical definition "the mean is affected by each and every value, which is an advantage. The mean uses all the data and each data item influences the mean.

The next item to look at is "days on the market". So perhaps a home in your area sold for a nice price but was on the market for 5 months (150 days). Do you (can you) afford to wait that long? If so, do not be afraid to keep your realtor in check by telling him/her what price you want to sell at remember they work for you. You should also follow up to be certain your home is listed and they are not ignoring the listing because they do not want to put in the work at that price. A good realtor will work hard at every price and let you be wrong for perhaps 21 days. At which point the good realtor will show you their efforts vs results and you will probably reason with them to drop your price a few percent.

Rents and prices are often expressed per square foot for comparisons.

Home prices are limited by various factors, such as the incomes of potential buyers, the cost and ability to construct new property to increase supply, and demand for rental units. Since eighty percent of all homes purchased are purchased with a mortgage,[citation needed] the ability to make payments, borrow money, and the cost of borrowing money are major influences limiting how far prices can rise before hitting resistance due to prices hitting levels where potential are unable to qualify. In general the ratio in the US are home values at 2-4 times annual income levels.