As some of your readers know, focusing on median sales prices can understate the magnitude of saving opportunities in the housing market. Like the image above, a closer look at sales behind the housing bubble reveals some surprising findings! If, for example, you focus on sales of single family homes in the 28 most expensive suburban communities in Greater Boston last month (Sept. 2007), these findings emerge from the MLS:
1. Sales were down nearly one third from last year: 216 sales in 9/07 versus 300 sales in 9/06;
3. Those who argue that prices are holding up in Greater Boston can point to these stats:
3.1 Twelve listings sold for over their original asking price or 1 in 20 listings;
3.2 Another 13 listings sold for their original asking price or 1 in 20 again;
4. In contrast, those who argue that median statistics are misleading would point to these stats:
4.1 One in four listings, or 53 of 216 single family homes in the most expensive suburban communities, sold for at least $99,000 less than the original asking price — a trend we mapped last year;
5. Looking just at the 86 homes which sold below their assessed value, 1 in 3 sold for at least $99,000 off;
6. Switching from dollars saved to percent saved last month:
6. One in three listings sold for at least 10% less than their original asking price; and worse
7. One in ten sold for at least 17% below than their original asking price!
So, if you are a buyer, don’t be too quick to base your assessment of market value, and hence your offer, on median sales prices or market indexes which are showing modest declines. Historically, one in five homes which go under agreement between Thanksgiving and New Years, sell for at least 10% below the original asking price. As the statistics above reveal, price reductions are likely to be deeper and more wide spread this year. We’ll map them on our award-winning real estate bubble map. It’s an open, interactive map so Real Estate Cafe clients can earn rebate bonuses by adding properties, too.