The other day at the Missoula Organization of Realtors board meeting the discussion came up that a lot of reports you see which show the list price of a home compared to the sales price isn't the most accurate. One of my colleagues pointed out that the MLS grabs the price at the time the offer was written and not the original listing price. With a recent update to our MLS system a newer export code popped up for "original price" which allowed me to export original listing price and compare it to final sales price.
So for fun, I downloaded data broken apart by 6-month intervals and looked at the average difference those houses came down from their original listing price to their final sales price. I would imagine the numbers in the chart wont totally shock anyone - as you can see as the downturn really hit, it also required much larger reductions of the original listing price to get the home sold.
So what stands out? It appears that the possible "peak" of our buyers market is now in the rear view mirror, that's good for sellers but possibly not the best news for buyers looking to get a "steal." However it shows we're far from being out of the woods here and while Missoula has receded from it's peak in the 2nd half of 2010 it's still showing that on average a homeowner will reduce nearly 9% off their original listing price at the time of sale.
The other thing to take notice is that with exception of the 2nd half of 2010 Missoula's sellers have been in a general holding pattern going back to the 2nd half of 2009. Why the spike in 2010? Well if you think back, that half of the year was when the 1st time and move up home buyer tax credit ended. The market was suddenly drained of a large portion of it's buyers and the "power" that remaining buyers had was at a predictably all time high.
I took another look at this too - how did these reductions stack up to changes in median sales prices? Before I pulled the data I actually assumed they'd move away from each other, the higher the difference in original list to sale price, the lower the median sales price. Well... it didn't really turn out that way.
The change in Median (by dollars) took a big dip, once again influenced by the 1st time home buyer tax credit. It recovered as investors and top-end buyers took over the market in late 2010 and shows that it's probably returning to a stable/flat area now that the market is returning to balance.
So what is our takeaway from this? Well first of all it appears the point in the market to make the best low-ball offers is now over and while sellers still need to get real and expect having to come down between 8% - 9% off their original listing price, it shows that the best times for negotiations might be in the best. However this doesn't mean the lowest total prices are gone. We'll still see bargains out there - just don't plan on being able to pull them down as far as you once could have.
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