Overview of Current Market Conditions

As we all know, we have seen a significant reduction in the market value of real estate during the last three years. To measure the extent of that reduction we use the median selling price of real estate within distinct categories, to illustrate those changes. (The median selling price is the middle price of all valid transactions arranged from the highest to the lowest. We use the median and not the average because the median gives equal weight to all sales. The average gives added weight to very high or very low sales.)

Shown in the following graphs are the changes in median price in Cranston, for single family homes, condominiums and two and three family homes. Each graph begins with the data from the last revaluation conducted in 2005 and goes on to show the changes that have taken place in the last three years since the 2005 revaluation.

As we can see in the single family data, the median price peaked in the year 2005, began to decline in 2006, saw a major decrease in 2007 and continues to decline in 2008. Based on the above data, single family homes have declined almost 10% since their peek in 2005.

From the graph shown above we can see that the market value of condominiums peaked in 2005, declined significantly in 2006 and continued to decline in 2007 and 2008. The drop in value since the peak in 2005 represents a 30% reduction. It should be noted that not all complexes will decline at the same rate and a change in median selling price can also occur when one year has a large number of high end condos sell and another year has sales of only moderately priced condo units. What can not be disputed is that a reduction in market value has occurred over the last three years.

In our last graph we have plotted the changes in median price for two and three family homes. Again we can see that the market for these multi-family homes peaked in the 2005 to 2006 timeframe. They began to decline in 2007 and have declined sharply in 2008. The decline in value from 2005 to 2008 is approximately 26%.