One way to gauge the strength of a local real estate market is to look at the variance between the last listing price and the final sale price. Remember the good old days when homes actually sold for MORE than asking price? Ah, memories.

In the graph below, I compare list-to-sale price ratios over the last year for the US (red line), New York metro (yellow), Los Angeles metro (green), Chicago metro (grey) and Boston metro (blue). The metric divides the list price by the sale price so 1.0 would indicate that homes were selling for exactly the asking price and 1.1 would indicate that homes are selling for less than the asking price. (For example, if a home with a list price of $250,000 sells for $200,000, that would be a 1.25 ratio.) 

So what does this chart say? It says that things are getting better, especially in Los Angeles. In LA, homes are basically now selling for their list price (1.01) whereas a year ago the ratio was close to 1.1 (meaning that the list price was 10% higher than the sale price). Nationwide, things appear to be getting better also -- the orange line is getting closer to 1.0. In Chicago, the asking price is still about 6% higher than the selling price. 

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