Who determines the value of your home on a given day?
a. Appraiser?
b. Real estate agent?
c. Zillow?
The answer is (d.) none of the above.
The value of a home on a given day is and has always been determined by the market. Just like any other good or service.
When demand outweighs supply, whoever controls the supply dictates the price.
When supply outweighs demand, those looking to buy set their own price. Sort of like Priceline.com.
image courtesy of priceline.com
The real estate market has changed tremendously in the past 5 years. For comparison sake let’s take the number of homes for sale in all of Clatsop County:
-in 2006 there was on average 317 homes for sale at any given time.
-in 2010 there was on average 522 homes for sale at any given time.
Forget about foreclosures, short sales and banks going bust for a minute and note the difference in supply between 2006 and 2010. In that time the supply of homes for sale increased over 60%!
Add to the huge increase in homes for sale a few banks collapsing and the entire mortgage industry nearly imploding and you’ve got recipe for a tough real estate market.
The real estate market has changed so much in such a short time that recent history is all that matters. As I said before the market (i.e. recent sales of homes that are similar to yours) is what determines the value.
Actually, it’s really not. What the buyer looking for a home like yours is willing to pay for it today is what will ultimately determine the value, but that’s a function of what other homes like yours have sold for recently…
In short, the biggest influence on the value of your home is what’s happening in your neighborhood right now.
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Jeremy Linder - Oregon Real Estate Broker License# 200608224
Kamali Sotheby’s International Realty- 587 Pacific Way- Gearhart OR 97138
503-738-5100