I’ve got a data jones, bad. I can’t see a hunk of raw data without wanting to dig my teeth into it. This morning I was wondering, in light of a slowing market, if sellers were in fact becoming more negotiable.
You bet! I downloaded the single family sales data from the Sullivan MLS for the past 3 months, and calculated the ratio of the closed sales price for each sale to its original asking price as well as final asking price. (38% of houses that sold had one or more intermittent price reductions prior to sale). Lo and behold, July’s closed sales were 91.9% of the final asking price, down 1.4% from May. The drop was even more dramatic when looking at final sales price compared to original asking price — 87.9% in July compared to 90.4% in May.
These are significant drops from last year, when the sales price to asking price hovered around 94% to 95% of final asking price, and 93% to 94% of original asking price.
Remember, these are averages, and in the past month a few houses actually closed at or slightly above their asking prices — but that’s pretty rare. The trend is clear; sellers are becoming more negotiable, and the gap between bid and ask may widen a bit further in the next few months. But "pecentage off the asking price" should not be used by buyers as a barometer of value. Right now we’re in a transition period from a sellers’ to a buyers’ market, and a lot of sellers haven’t gotten the message yet. As the market rebalances, asking prices will come more in line with sales prices, and the "bid to ask" ratio may rise again. A number of houses recently have been ‘priced to sell’, with some great values. I’m always a bit hesitant when a client asks me what the average "bid to ask" is here in Sullivan County, because they then make the leap that they’re not getting a good deal unless they get at least x% off the asking price, no matter what the actual ‘value’ of the house.