Vancouver Real Estate: Where Priced Right Really is Half Sold

If you’re going to have go there eventually, why put off the inevitable?

I’m talking, specifically, about those two words sellers fear and buyers expect “Price Reduced”.

It doesn’t HAVE to be that way though.  I’ve recently had the chance to dig deep into some data.  I did a dissection of some Real Estate stats from the Vancouver, Clark County real estate market during September, 2008 that puts a huge exclamation point on the old adage “Priced right is half Sold!”

I took a detailed look at the sold Single Family Residential homes in September, 2008, specifically looking for correlation between Sales Price and Days on Market.  The results were nothing short of startling.

Of these sales transactions, 27.4% sold in less than 30 days,  I found this to be a surprisingly high number, based on the current state of the market.  Additionally, nearly one-third (32.7%) of the transactions took 100 or more days to sell, a number I thought would be higher.  But then I remembered: this data was based on the now-modified concept of “Current Days on Market” – which only defined market time based on the most recent active listing for that property (vs. Total or Cumulative Days on Market – which is, get this, based on the cumulative days on market…). Anyhow, I recently dissected this change and what it means to time on market.

More to the point, however, was the Pricing aspect of all this.  Get this:

Of the homes that sold in 30 days or less, the Sales Price was, on average, a miniscule 0.44% discount to the original asking Price… in other words, over 99.5 Cents on the Dollar to their asking price. Wow.

But, as always, there are folks who start out high, hoping for the best, before the reality of the market pulls the rug out from underneath them.  Of the folks who sold with a “Current” Days on Market time of over 120 days, their selling price was, on average, a whopping 14.61% drop from their original asking price.  And with an average current DOM for these folks of 193.3 days (yes, almost seven months)… well, I bet they wish they had just priced it right to start with.

Again, it seems a house – priced right – is half sold. Especially houses for sale in today’s Vancouver and Clark County real estate market. Assuming you had already eliminated dart-throwing or pulling a number out of a hat as the best way to price a house for sale, for more in-depth analysis and a well-thought out selling strategy I know a guy who can figure out how to put two halves together and get a house sold.

Is 17 Your Lucky Number…?

Not if you are a seller in today’s Clark County real estate market.

No matter how many ways I’ve looked at the recent statistics from the local MLS, well, they ain’t purdy (with apologies to all my English teachers). Average “Months of Inventory” (MOI) now stands at 17 months. OK, so that’s a tad bit different than the 1.7 Months of Inventory (MOI) in the Portland market in the summer of 2005. Amazing the difference a decimal point can make!

(A quick reminder, MOI is defined as the time it would take to sell all the houses currently up for sale, based on the number of actual sales, if no new inventory came on the market. Opinions vary, but a market with healthy balance and equilibrium will have between 6.0 and 8.5 MOI. )

As always, we see different areas of town vary in their market performance. If you are looking to sell your home in Fisher’s Landing (7.3 MOI) or Salmon Creek (10.5 MOI) you likely stand a better shot than say, Washougal (33.6 MOI). Yipes!

With the amount of competition throughout the Clark County real estate market, it behooves a seller to be properly positioned. I have talked before about the fact that only the best deals are getting done. And remember, “best” does NOT simply mean just cheapest price, but a well thought out strategy, combining price and condition that creates an unbeatable market presence compared to competing inventory.

We have recently started doing a complete staging analysis as part of some of our home-selling packages. We bring in someone to add another set of eyeballs to the evaluation of property condition and what needs to be done to facilitate a timely sale. While these detailed reports tend to be very, shall we say, well, detailed, I’ve made my sellers promise not to beat the messenger, because in this market, a smart seller will take all the help they can get.

Pricing in Today’s Market: The $64,000 Question (recently reduced from $67,900)

I admit it, I’m a geek. Not a “got beat up in High School geek”, no those geeks are somewhere making serious coin writing code for some new fangled web 2.0 gig. No, I’m simply a stats geek. The kind of geek who crunches the OBP and OPS on my nine year-olds baseball team. The kind of geek who can figure the ERA and WHIP on my eleven year-olds baseball team. And the kind of geek who looks at real estate market data with a gleam in his eye and a skip in his step. Weird, huh?

Anyway, sometimes this numerical obsession actually comes in handy. I’m not sure if you have noticed but there have been a couple of price reductions recently in the market (sarcasm alert!). While out looking at houses the other day, a buyer client asked me the most basic, simple, yet incredibly appropriate question I had heard in a long time.

“If the sellers were going to have to eventually drop the price this much, why didn’t they start out with a more realistic price?”

Ah. The $64,000 Question (recently reduced from $67,900, by the way).

I could have waxed and waned about the seller’s unrealistic expectations, or the possibility that the agent had failed to properly advise them on the current, shall we say, pricing pressures in the market, or, who knows, maybe the agent just “bought the listing”. (Nah, that NEVER happens).

But I refrained from mounting the portable soap box (I carry one in the trunk specifically for these occasions) and instead explained to my client that these things happen. I assured her that we would unquestionably be evaluating our purchase/offer options based on our analysis of the homes value, regardless of how much of a “deal” it looked like after the serial price reductions.

While she was satisfied with the answer and my assurances, the question nonetheless remained ingrained firmly in my brain, bouncing relentlessly back and forth between my two remaining brain cells. I had to research this, because, hey, it likely included some variation of stats. Woo hoo.

So off to the database, spreadsheets and refrigerator I went. Determined to create an answer, THE answer, as to why a seller shouldn’t just start off priced high and come down “someday”.

The following chart shows the correlation between initial pricing and final sales pricing, with an analysis of corresponding time on the market. It is the product of a couple of hours of research and a few cold brews. Any inaccuracies should be addressed to the boss.

In a nutshell, these stats were based on homes that were: 1) priced within ~20% +/- of the Median Home Price; and 2) SOLD in the month of August, 2007. Obviously these numbers would be significantly skewed (and NOT positively, mind you) if we were to include all listings that didn’t sell too. But that is another post altogether.

Bottom line, if you actually want to sell your house in a timely manner, this data says it CAN happen, even in this market… but initial pricing is critical.

For those looking for the simple interpretation of the chart:

Sellers who priced their houses right to start (or close to it, as defined by a final Sales Price of at least 98% of initial List Price) sold relatively quickly, on average 39 days. Those who started high and finally sold their house on a reduced basis (defined as a Sales Price of less than 95% of initial List Price) saw the process drag out to 108 days (or almost three times longer). Again, these are successful sellers; the numbers would be waaaay (sorry for the technical jargon) worse if it included all those that failed to close.

There you have it. Now, if you’ll excuse me, all this dry reading has necessitated a thirst-quenching cold one… we’ll see what kind of chart that leads to.