Finding Bottom?
With sales numbers increasing, and prices falling dramatically in many areas, it's time to start looking for bottom indicators. I've been struggling to find signs in my data, but with so much action taking place outside the MLS market, there are challenges.
One idea I came up with is a comparison of final listing prices of homes that actually sold, with the actual sales price. If discounts are being taken, that would indicate a disequilibrium in favor of buyers. Conversely, if buyers are paying a premium over asking, that would indicate asking prices have fallen too much, and houses are attracting offers above asking. With that in mind, I offer these graphs for your consideration:
The first graph shows the average quarterly discount over final asking price for each zip code with more than 200 MLS sales for 2008, while the second graph shows the average price these houses sold for in the same zip code and time frame. As you can see, all the zip codes began 2008 by accepting offers below asking, some well below. However, as 2008 progressed, the discounts declined until buyers were offering a premium above asking price. Also, average sales prices declined throughout 2008 in every zip code, some by as much as 25%.
While the quarterly sales price declines continue to outpace any premium or discount being offered, it is clear that at these particular price levels, sellers are regaining some leverage. I will have more to say on this data in the next couple of weeks.
**Edit**
I forgot to include some selection criteria that you might find important. Listing/sales pairs were excluded from the averages if there were more than 180 days separating the last listing date and the sale/recording date. In addition, any pair that had a greater than 25% premium over asking or a greater than 19% discount below asking was excluded. These ranges were chosen in order to exclude REOs or houses priced far below market as a gaming tactic.
