A sensible article from CoreLogic was published yesterday pointing out that new home prices have not really increased as much as the headlines indicate. You can find the original article here.
When people compare average or median home prices from year to year they tend to assume they are comparing like with like. However the typical new home being sold today is much larger and heavily loaded with features than was typical just a few years ago. CoreLogic found that after adjusting for size and features, new home prices had risen only half as much as reported for the nation as a whole. The effect is happening across the whole country it appears, but has been particularly strong in Greater Phoenix.
The average new home size since January 2011 in Maricopa and Pinal Counties has been 2,394 (2,434 for single family homes and 1,559 for condos & townhomes). The average size of all other (not new) homes sold since January 2011 in Maricopa and Pinal; Counties has been 1,891 (2,002 for single family homes and 1,235 for condos & townhomes).
So the average new home has been 27% larger than the average re-sale home.
The difference is even greater when we look exclusively at homes sold in 2014. The average new home in 2014 has been 36% larger than the average re-sale.
This is a dramatic trend and only a handful of commentators have remarked on it. I commend CoreLogic for bringing it to a wider audience.
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