I have found recently that many neighborhoods in the Central Florida housing market, show significant differences between what a seller's expectations are and what is reality from the buyer. One example of this, is in a community south of Clermont, FL known as Westchester.
There are presently 15 active listings in the Westchester community ranging in size from 1,176 sf to 2,200+ sf. Listing prices are from $109,900 to $249,000. In the last 12 months, the MLS reports 7 closed sales from $150,000 to $209,000 for homes of similar size range. There are currently many short sale and REO/Bank owned properties noted in the community. The adjacent community, Greater Groves, is additional competition in the market. This community has had 12 sales in the last 12 months from $110,000 to $250,000 for homes of similar size and age. Active listings in this community range from $117,900 to $279,000 with 22 active listings.
Total between the communities at present are 37 active listings with 19 closed in the last year. This is considered an over supply of available inventory based on absorption rates.
The market is considered to be declining at present. The following is a view of the 10 year trend history for the subject's market area. This includes all sales of single family homes regardless of age and size. This represents the average sold price/sf and the average days on market (DOM) for the area:
See graph below:
As noted, the trend in average sold price/sf rose dramatically from 2002 through 2006 with the peak being in 4th quarter 2005. The trend since 2006 has declined with market corrections and has dropped in 2007 due to many short sales and bank owned sales in the market. Likewise, the average days on market has escalated since 2006.
The following is a view of the average market indicators in the last 12 months:
The average list price vs sales price is 6.80%. Median is 9.31%. The reconciled LP vs SP is 8.00%. This represents the difference between the seller's last listing price and the final sales price. However, the average listing is typically 10% over priced as noted from the variances between original listing price and sales prices in the area.
This indicates that the seller's perspective is typically higher than the market. This also indicates why the average DOM is 133 days. Many listings show reductions after 90 days and continued reductions until the market median are met. Typically, from the last reduction to contract is within 30 days once the price reaches levels where buyers are acting. This indicates that aggressive pricing in the market is key to selling homes under 180 days.
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Conclusion:
As noted from the table to the right, the average decline in 2008 has been 2.38% per month. There was some gain in the 3rd quarter 2008 - yet this was again offset by a strong decline in the 4th quarter sales noted so far.
The general trend as noted by this table, as well as the 10 year trend chart attached above, is that the market is still declining at a rate of 2.38% per month on average - stronger than past years.
This market was influenced by investor speculators during the 2005-2006 market and thus, has had harder corrections than other surrounding areas as a result.
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Further evidence of the trends of over pricing in the market are shows in the graph below:
The general trend between original list price, final list price and sales price in the last 3 years in the market. Certainly, the perspective of a buyer in this market since the decline....is MUCH different than the seller's.
For a FREE PDF copy of this report, please click HERE.
Make it a productive day
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Do you think that the sellers perspective might be different because they feel like they have to compete with all the short sales/bank owned homes/foreclosures that are offering extremely low prices? So in return they lower their price in hopes of getting a quicker transaction and once the home inspection is performed, they might be negotiated even further down in price from what they originally asked. I believe Pre-Inspections would solve alot of those issues for sellers of normal listings and for bank-owned/foreclosure listings. I'm just not sure sellers want to put up the initial cost for the inspection. Although it would let them know what defects they have, give them the negotiating power, and save them money in the long run.