I’ve been playing with some numbers, trying to get a real (or at least an accurate) picture of our local market conditions. Most notably, I’ve been looking at days on market and the sales price to list price ratio.
I’m hampered by the way our Tucson MLS system allows agents to access the information for Sold properties. Exporting the information is crude, at best, so I’d say the results I’m getting are in the ballpark, but probably not to-the-decimal perfect. I’ll keep futzing with it, to see if I can get real numbers for a broader area, and more accurate figures.
If you follow the market statistics put out by the MLS system, it calculates a straight average days on market for sold listings, but doesn’t consider any previous times that house was listed. For example:
If 123 Elm Street was for sale by Agent X for 70 days, and then by Agent Y for 90 days, and then by Agent Z for 45 days before it finally sold, our MLS system would consider that 45 days on market (DOM), instead of the cumulative figure of 205 days on market (CDOM).
I want to know what the cumulative days on market (CDOM) is for the various parts of town.
For starters, I considered every single family home sold in Central Tucson since January 1, 2006. Ideally, I’ll break that into quarterly figures, but for now, we’ll just average everything since 2006.
Result: Average Cumulative Days on Market from 1/1/06 to now: 95 days.
Days on Market as calculated by MLS during the same period: 47 days.
I also calculated the sales price to list price ratio, using the original listing price of the original listing. When MLS calculates this figure, they consider only the last list price, and not the original list price. For example:
If Agent Q lists a house for $350,000, then reduces the price to $325,000, and again to $320,000, and the house sells for $300,000, then we calculate: $300,000 / $320,000 = 93.75%. The house sold for about 94% of the List price. If we look at the original list price, then the house sold for 85.7% of list price.
Result: Considering the original price from the first listing, houses go for 80% of Listed price.
Considering only the most recent list price, houses go for 97% of List price.
I need more analysis before I can draw any real conclusions. I have a good idea of what is going on, but I like to see numbers to back up my ideas. Here’s a couple thoughts:
- Agents have been withdrawing and relisting properties to “reset” the DOM for a very long time in Tucson, it’s an acceptable practice in the area. If the percentage of listings withdrawn and relisted has stayed fairly constant over the years, does that make the MLS reported DOM a better index of the state of the market?
- If the proportion of listings being withdrawn and relisted has increased (and I believe that it has), then calculating CDOM per quarter back through several years should show a large increase in CDOM over the past 16 months or so.
- Are Sellers overpricing their homes more rampantly than in any other time, at least proportionately? I’d need to calculate the sales to list price ratio for several years back and watch for trends.
- I’m curious if days on market or sale to list price ratio changes for different price brackets or areas of town. I’m also curious how days on market varies per price bracket and area of town.
- If a property truly sells in 30, 60, or 90 days, what is the actual ratio of sales price to original listing price? I’d assume that the faster it sells, the closer it goes to the list price.
- What’s the average price reduction, and when does it occur?
You can tell I’ve got more questions than answers, and am frustrated by the restrictive data available to me. Hopefully, we’ll get some interesting answers in the weeks to come. I’ll let you know what I learn.
June 7th, 2007 at 9:47 pm
> Result: Considering the original price from the first listing, houses go for 80% of Listed price. Considering only the most recent list price, houses go for 97% of List price.
These figures only seem to come into play in two situations - a buyer trying to figure out how low they can go, and an agent trying to make themselves look better by playing with list-to-sales ratios. (Redfin’s really good at that.)
The first figure, sale compared to original list price, doesn’t necessarily mean a lot because there still are many, many agents who’ll stick a sign in someone’s yard at any requested price, even if the home never will sell. Selling the home isn’t their goal - they’re trying to pick up buyers but in the process create a sort of phantom inventory.
The second figure might have more to do with the agent, assuming the agent didn’t fall into category one and has spent the last three months or so beating their sellers until they drop their price.
June 7th, 2007 at 10:40 pm
I look at those percentages as a curiosity.
I always hear how everything is so overpriced. Is it really worse than it ever was, in terms of things that actually sell? I think there’s an expectation from buyers that they’ll get homes far below list price, even if it is new on the market. The ratios tell me that at least SOME of the new stuff is priced right at the start, and sells close to list, which makes a buyer feel better about not getting something 20% under list price, when the media is telling them they should be getting low-ball bargains. If I compare original list prices to sale prices from 5 years ago, what does that look like?
If I take a positive outlook of agents, learning to price in what may be a declining market, then I should hope to see fewer overpriced listings as agents figure out pricing in a different market, and the percentages should rise. Although, with the typical short term career of agents, this may not be true.
What piqued my interest is that my MLS stopped putting out this figure a couple months ago. Why would that be? Makes me curious.
It is, however, very powerful to be able to tell someone that the good stuff is still selling quickly: if you can say that homes that sell in the first 30 days are going for 99% of list, or that 60% of homes sell in the first 60 days, for 97% of their original list price, on average.
It’s all sort of an academic exercise. I could probably spin the numbers either way, fight for only using DOM instead of CDOM, and the other way around. Same thing for the ratios. It just interest me to find out how people are pricing, how many times homes go through multiple listings and eventually sell.
June 8th, 2007 at 8:24 am
Kelley, great blog. I always enjoy reading your posts because they are well thought out and well written. I have encountered some issues that are parallel to those you mentioned above.
The existing MLS system here in town does not really provide the expandable user interface options that I think are truly needed (wasting valuable time). As a result, I’ve resorted to writing my own MLS interface that I will use with the twice-daily feeds we’re provided.
One of the features I’m incorporating is the CDOM you mentioned above as well as a few other statistics I find myself constantly researching about the market. Will keep you posted!
*adds to blogroll*
June 8th, 2007 at 8:44 am
The trouble with the feeds is that they don’t provide solds, withdrawns, expireds - unless you’ve found a way around that? Share!
August 14th, 2007 at 1:11 pm
[...] been in the mid sixties for 9 months now. If you’re a regular reader, you know DOM isn’t my favorite figure. We’ll do some months of inventory calculations in a separate post, which I feel is a [...]