The current market is characterized by a large supply of inventory, and a small number of motivated buyers. In this classic example of supply and demand – too few buyers and too much inventory – this condition contributes to a continuation of falling home prices.
Real estate is very much a numbers game. Statistics abound, from data such as Days On Market to Absorption Rates. I would like to take a closer look at one of the underlying statistics that is play a big factor in the local Wallingford real estate market.
The number I am referring to is call Percent Of Settled To Original Price. This number signifies the selling price of a home expressed as a percentage of the original listing price.
Currently for the first four full months of 2011 this percentage stands at 88.11% for Nether Providence Township. and 88.2% for Delaware County as a whole. In a simple example a Wallingford home that was originally listed for $100,000 ultimately sold for $88,110.
Now this percentage has a ominious origin – the orignial list prices of most homes coming onto the market is too high! Last year for instance this number stood at 92.98% for local homes – this is a drop of 4.78%. That is a very large drop in this indicator, which historically tracks in the 93 to 95 percent range.
The underlying cause of this is that the owners of homes listed for sale are slow to catch up with the reality of current market forces. Oft heard comments such as ” my neighbor’s house sold for $300,000 last year, I should get more because I have a nicer house”, are abundant. Last year is ancient history, and the current reality is by choosing not to believe the current sales trends and numbers, many home sellers are setting themselves up for a rude awakening.
“Trying” a unsubstaniated price for a few weeks is doomed when the reality of the Internet is that you are only a “new” listing for maybe 2 weeks at best, after which you fall into the pile of unviewed listings, and are forced to play the game of chase the market down.
Remember these three brutal market realities:
– Buyers do not care what you paid for your house
– Buyers do not care what you “need” to realize as a gain from the sale of your home
– Buyers will not pay you dollar for dollar for improvements you made to your home
As the market struggles to plateau at an unforeseen bottom, paying close attention to the numbers behind the sales is a must when determining a listing price for any given home.
