I’m working on a new and improved (hopefully) version of the Tucson market statistics page, so I’ve been considering what kind of information would be helpful to include and at what level of detail, and balance that with not having statistic generation become a full time job.
By the way - if there’s something you’ve been dying to see on that page, or some other metric you’d be interested, leave a comment and I’ll put it on the list for consideration.
Anyway. So I was perusing the latest market statistics put out by the Tucson MLS, and at the end of the president’s introduction, she says that the ratio between list price and sales price averages at 95.34%.
The list to sales price ratio is a figure that hasn’t been included in those reports for a while, at least not in a prominent manner, like it used to be.
So I’m looking at that 95% sales price to list price ratio, and I’m thinking - of my most recent buyers and sellers, no one paid 95% of list. Most of my buyers found very well priced homes, moved quickly, and got those houses. My last few listings haven’t closed yet, so I can’t disclose specifics, but we’re pretty darn close to list price on those too.
What all the averages and numbers don’t take into account is individual pricing. Sure, maybe we can use average numbers if the house is average and the price is average. But sometimes, we’re looking at a new listing, with a fabulous price - and there’s no way you’ll get it for 95% of list. Heck, I’ve been in bidding wars and multiple counter offers several times this year.
There seems to be a perception that buyers can get sharp discounts off of every house. And I’ll gladly agree that there are still vastly overpriced homes out there where that applies. But it isn’t a hard and fast rule. You can’t just take 5% off every list price and expect that to be accepted. Some sellers ARE pricing very well, are demonstrating clear value, and their houses are selling fast. You’ve really got to analyze each home individually, on it’s own relative merits, before making a decision as to value.
Back to my numbers now. I wonder - if you track the rate of change of, say, average sales price or active listings, would there be too much bounce in the data, especially on a per area basis? And would smoothing it take away any value that data might have had? Anyone?
June 24th, 2008 at 9:44 pm
Well, the SE really bounced last month (as far as inventory going down) and that makes me happy personally .
I love your absorption rates and other graphs. Keep up the good work! 
I’m sure there are many more silent and grateful readers. Thank you, Kelley.:-)
June 25th, 2008 at 12:26 pm
For so many houses, in my experience (North Tucson), the seller will start at a price around 20% or even 30% of what a buyer will pay. So, the list price steps down, in stages, over a period of maybe several months. Some lowball offers may have been made along the way, which the seller probably rejected at the time. Buyers (like me) wait for the steps down in price, until the list price gets within maybe 10% or 5% of what we would be willing to pay, before considering making an offer. So, it’s really pretty much like a Dutch auction process, as I see it, right now. I’m not sure if the selling price to list price percentage has much relevance, in these circumstances, except insofar as it indicates some ‘conventional’ accepted margin, in the lengthy dance of selling, or buying, a house in Tucson.
June 25th, 2008 at 12:27 pm
I meant, of course, that the seller will start at a price around 20% or even 30% ABOVE what a buyer will pay.
June 25th, 2008 at 12:35 pm
RP - another good point. It’s never been a favored ratio with me either because there are too many factors that can make the figure rather worthless. They used to report the ratio in relationship to days on market, which was a little better. Back in the early 2000 boom days, the ratio would be at over 100% for homes on the market between 0-30 days, and you could see it decline as the days on market wore on.
June 27th, 2008 at 11:52 am
We are finding the same ratio for the broader Phoenix market as well. 95% of list is the average selling price. Average being a key component, just like you note. And indeed, homes priced well to begin with are selling for their asking price.