I have been providing information recently on the highest priced home sales in the Birmingham, Alabama area. The city of Mountain Brook has consistently been where most of these sales occur. As I have said in the past, Mountain Brook is one of the most expensive areas in the state to buy a home. I did a post earlier in the year about the decline of values and home sales for those properties over $500,000, you can read that post here. As a natural extension of that post I thought I would look at a specific market. Since Mountain Brook has an abundance of homes in this price range it was a natural choice.
One of the things that appraisers do is analyze data to see trends to help us understand the market. We do this analysis by collecting sales data and then charting the results. The charts make it easier to see the results. The chart below includes all single family home sales within the Mountain Brook area. As you can see, during the second half of 2007 the trend line peaks and then begins to decline. The trend line indicates a decrease in values of approximately 20% from that period to the current period. This supports the earlier findings of $500,00+ homes. What are your thoughts on this? Do you live in the Mountain Brook area? Have you seen your homes value decrease?
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Unfortunately it is sort of meaningless. Upper end homes simply are not selling, and proprtinatly, lower end homes have been selling, so more than the price of a house and how it may have changed you are charting and observing fewer homes being sold in the high price range and more sold in lower price ranges so the average goes down,, That does not relate toi the value of an individual house, only to the mix of homes sold. unfortunately using the median does not help here either, only using repeated sales of the same house over time as Case-Shiller does might you have good data, even that however has some weaknesses. While there probably has been some decline I doubt as much as you imply. Of course if you really want to get rid of that high end house,, maybe so, I have seen some big reductions,, but that tends to be from over-inflated expectations rather than rational prices…
Hey Tom, thanks for the feedback. I agree with you on your comments, however just from looking at the chart it appears as though the distribution of sales from the low end to the high end has been pretty consistant, however a more in depth analysis of that aspect might be warranted. My graph was meant to give a more general snapshot of the market. In no way do I think the rates of change could be indictative of any individual home. Each market and submarket of home is unique. Whenever I do an appraisal I drill down in the data to use sales that reflects the style, age, quality, and approximate price range of the home. Thanks for your insight, I look forward to talking with you more in the future.