In response to a recent set of KNS articles about eclectic neighborhoods in both Nashville and Chattanooga, Josh Flory over at the Property Scope is wondering which Knoxville neighborhoods, if any, qualify as funky or eclectic:

Is the Fourth & Gill/Downtown North area the best candidate? Is our city lagging when it comes to fostering eclectic and funky sections of town? Or is this kind of organic development over-rated in the first place?

All excellent questions. Any thoughts?

Josh Flory over at Property Scope noted an article from The Tennessean about the Nashville housing market in his daily briefing today. The article says that although Nashville home sales are down, purchase prices are up:

Just what you wanted this week, more numbers, right? Josh Flory over at Property Scope has done his write-up on the Knoxville February Home Sales Report and he asks an interesting question:

“The median price for homes with two or fewer bedrooms, or four-plus bedrooms dropped, though. At the small end of the spectrum, the median price fell by a whopping 19.9 percent, to $62,500, while the median price at the high end fell by 3.7 percent, to $240,000.

Any thoughts on why this happened? One interesting quirk is the fact that there were 14 homes in the smallest category that sold for less than $20,000 in February, compared to only three in that category during February of 2007.”

I have no idea about the homes under $20,000 quirk, but as for the other, I think the answer has to do with the tightened mortgage qualificaiton criteria. People who would have bought on the lower end last year simply could not qualify this year, while folks looking to buy on the high side wound up qualifying for less loan and had to buy less house.

Does that make sense to anybody else or have I not had enough coffee today?

Get ready to get confused.

I was just over at Property Scope and saw this alarming headline-

“Knox Home Prices Fall In January”

Yes, the Knoxville Area Association of Realtors sales data for Jan. ‘08 is out - let the number crunching begin! Let’s read what else Property Scope had to say-

“The median sale price of Knoxville-area homes fell in January.
According to the Knoxville Area Association of Realtors, the median sale price of a two-bedroom home was $66,000 last month, a drop of more than 12 percent compared to the January, 2007, median of $75,700.
Larger homes were off less dramatically. The median price for a three-bedroom was $144,000, down $1,000 compared to a year ago, while the median price for a home with four or more bedrooms was $218,000, also down $1,000.”

That all sounds terrible, especially the 12 % in 2 BR homes. What makes me want to tear my hair out is that this article, especially the headline, makes it sound like home values have dropped, when the author is actually talking about a drop in median home prices.

So what’s the difference?

A median home price is the halfway point between the most and least expensive homes sold in an area in a given period of time. It is not an average of home sales prices and it is not an indicator of home value, per se. If more people are buying more expensive homes in an area, the median home price rises, just as if more people are buying less expensive homes, the median home price drops. This does not necessarily mean the value of the homes they bought increased or decreased.

What the KAAR median home sales data tells us, is that more less expensive homes sold in Jan. ‘07 than in Jan. ‘08.

But the KAAR data also includes average or mean homes sales data. Average home price is calculated by adding all of the sales prices for a type of home together and dividing them by the number of properties sold.

OK, now, let’s take a look at average or mean. home sales price in the KAAR data, just for laughs & giggles-

• Average sales price of a 2 BR home was down 7%
• Average sales price of a 3 BR home was down about .03%
• Average sales price of a 4+BR home was up about .05%

So, according to the mean or average sales data, one of these categories actually rose. This could be because property values went up. It could also be for the same reason that some folks don’t trust mean sales figures - the most expensive homes tend to skew the data upward (the same can be said for foreclosure or distressed property sales, which skew data downward).

I told you it was going to be confusing.

What is clear is that the Knoxville house market has slowed, at least compared to Jan ‘07. Days on market is up and there is more inventory. However, as I wrote about last week, the condo market is chugging right along, doing extremely well in spite of all this.

As for your own home, don’t lose hope yet. Real estate pricing is a tricky business. Your home’s market value depends on many factors — desirability of your neighborhood, recent neighborhhood sales, updates, general condition, whether or not train tracks were laid in your back yard since you bought it, and, of course, location - not just on KAAR sales data.