Saturday, July 6, 2013

Who Is Right About % Of Increase

Confused by Percentages?
Here is a chart of different reporting agencies indicating the percentage of increase in housing prices this year vs the same time period last year.  In my newsletter, I list different percentages.  The article that produced this graphic listed a complex set of values being used.  Average prices; Median Prices; Varying geographic areas: etc.

I figure that I had better explain exactly what I use and why I believe it is the truest number.  First, the only marketing area I track is the downtown Charlotte market which is comprised of the First, Second, Third, and Fourth Wards.  The physical boundary is the ring creates by the Belk and Brookshire Freeways, and Interstate 77.  It consists of 4.5 square miles of property.

The only hard, fast constant number to follow is the size, in terms of square footage, of those properties.  For example, if a property sells for $2,100,000, it will throw off the average and median pricing for an area significantly, however, if that property is 7,500 square feet, the average square footage price is $280, the same square footage price of a unit selling for $280,000 that is 1,000 square feet.

To be sure, there are many things that go into the sale price of a property, but the basis remains the per square foot cost.  Comparing the average square foot sold downtown 2013 vs. 2012 equals $224 vs. $196, that is a 14% increase.  I have always found this to be the most consistent and accurate measure.