Home Values Rise Even as Median Prices Fall

Recent headlines have been talking about home prices dropping compared to last year, leaving many people wondering if the housing market is slowing down. If you’re thinking about selling your home in Naperville or the Chicago suburbs, it’s easy to get confused by this news. But here’s the truth: while the median price of homes might be falling, home values are actually rising.

Let’s take a closer look at what’s really going on in the housing market, and why you shouldn’t be too concerned if you’re planning to sell your home.

Homes on the Market Right Now Are Smaller

One of the main reasons the median home price has dropped is because the homes being sold right now tend to be smaller. The median price represents the middle point of all homes for sale at any given time. If more smaller, affordable homes are being sold, it brings the median price down, but that doesn’t mean home values are decreasing.

To understand this better, think of the median price like this: imagine you have three coins in your pocket—a nickel, a dime, and a quarter. If you line them up in order of value, the middle one is the dime. But if you remove the quarter and add another nickel, the median is now five cents. The value of each coin hasn’t changed, but the median has.

This is exactly what’s happening in the housing market. As Danielle Hale, Chief Economist at Realtor.com, explains:

“The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further.”

In other words, more smaller homes are being sold, and that’s why the median price has dropped. But that doesn’t mean your home is worth less today than it was a year ago.

Price Per Square Foot Is Still Rising

One of the best ways to measure home values is by looking at the price per square foot. This gives a clearer picture of how much buyers are willing to pay for space in a home. Even though the median asking price has gone down, the price per square foot is actually rising.

According to Ralph McLaughlin, Senior Economist at Realtor.com:

“When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year.”

This means that while smaller homes are affecting the median price, the value of homes overall is still going up. So, if you’re a homeowner in Naperville or the Chicago suburbs, your home is likely worth more today than it was last year—even if the headlines suggest otherwise.

National Trends vs. Local Markets

It’s important to remember that while national housing trends provide a big picture, real estate is local. Home values can vary greatly depending on where you live. For example, the Chicago suburbs and Naperville might be experiencing different trends than other parts of the country.

According to the Federal Housing Finance Agency (FHFA):

“Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.”

This means that, on a national level, home values have been steadily rising for more than a decade. But to get a clearer understanding of what’s happening in your area, it’s important to work with a local real estate expert who can help you understand the market conditions specific to Naperville or the Chicago suburbs.

Why Home Values Are Still Increasing

While it might seem surprising that home values are rising even as median prices fall, there are several reasons why this is happening:

1. Low Housing Inventory

The number of homes for sale remains low in many parts of the country, including the Chicago suburbs. When there are fewer homes on the market, buyers compete for what’s available, driving up home values.

2. High Demand

Many people are still eager to buy homes, especially as mortgage rates have started to come down from recent highs. This demand keeps home values strong, even if more smaller homes are being sold.

3. Price Per Square Foot Increases

As we’ve already discussed, the price per square foot is rising, which shows that homebuyers are willing to pay more for the space they’re getting, even if the median price is lower because of smaller homes on the market.

4. Smaller Homes Being Sold

Right now, there’s a larger share of smaller, more affordable homes being sold. This shift in the types of homes being listed for sale is what’s bringing the median price down, but it’s not a reflection of the overall market value.

What This Means for Home Sellers

If you’re a homeowner thinking about selling, especially in Naperville or the Chicago suburbs, you shouldn’t be worried about the headlines saying prices are dropping. The reality is that home values are still strong, and buyers are actively looking for homes.

In fact, this could be a great time to list your home, especially if you’ve built equity and are ready to take advantage of the current market conditions. The demand for homes is still high, and with more affordable homes being sold, your larger or well-maintained property could stand out to buyers looking for something bigger.

Tips for Home Sellers:

• Work with a Local Agent: A real estate agent who knows the Naperville and Chicago suburbs market can help you understand what your home is worth and how to price it competitively.
• Highlight Key Features: With smaller homes being sold, make sure you highlight the unique features of your home, such as extra space, a backyard, or modern updates.
• Price Strategically: Even though home values are rising, it’s important to price your home right to attract serious buyers. Your agent can help you find the sweet spot between getting top dollar and selling quickly.

Bottom Line

The drop in median prices doesn’t mean your home value is falling. In fact, home values are still on the rise, especially when you look at the price per square foot. The key takeaway is that more smaller homes are being sold, which is pulling down the median price, but overall, homes are still appreciating in value.

If you’re thinking about selling your home in Naperville or the Chicago suburbs, don’t let the headlines scare you. The housing market remains strong, and with demand still high, this could be a great time to make your move. Reach out to a local real estate agent to get a clear understanding of what your home is worth and how to take advantage of the current market conditions.

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