Today’s charts present home prices in eight area jurisdictions from January 2008 through December 2011.
It’s interesting and helpful to see where prices have been, and it can give us a better idea of where prices might be headed this year.
However, home-price data are trickier to interpret than sales data. So let me lay out a few things that will help you make sense of it.
For one thing, the data from a single month is very susceptible to fluctuations caused by the sale of a few very expensive or very inexpensive homes.
It probably doesn’t need to be said, but remember, the homes sold in November were completely different properties from those sold in December.
That makes the analysis of home prices very different from that of commodities such as oil or corn. When you compare price data for those products, you are always comparing apples to apples. Not so with homes.
This is the primary reason home prices go up and down so much, not because home values are that volatile. You’ll notice that prices for Arlington County and the District jog up and down more than prices in other jurisdictions.
There are two reasons for this: First, fewer properties are sold in Arlington and the District than in larger markets such as Fairfax and Prince George’s.
Second, there’s a greater diversity of homes in Arlington and the District, with everything from inexpensive condos to multimillion-dollar mansions. A different mix of those properties sells each month, which can make price data jump up and down.
Despite all this variance in the monthly data, you clearly can see that in 2008, the area suffered a significant drop in median sales prices. It’s most clear on the Virginia chart, because prices took longer to hit bottom in Maryland.
Prices began to improve in 2009 in the District and much of Northern Virginia. That’s because the drop in prices in 2008 stimulated sales activity, which then caused prices to stabilize and even rise in 2009 and 2010.
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