Sunday, February 04, 2007

Unresolved inventory as of February 2, 2007

No, the graph below isn't a picture of New Year confetti, it's just a plot of square feet versus current asking price (accounting for reductions or increases to the original asking price) of all my inventory records for which I have no sales resolution. The shape or color of the plotted point is insignificant, I just thought it would be better to look at than a blob of blue diamonds.

In these 548 records, the median sqft is 1843 and the current asking price is $804,500. In a previous post, I calculated the median original asking price for those properties that sold in December as $809,000. So when I took this inventory snapshot, it appeared that, for now, the market has been catching on and lowering its asking price overall. When I look at certain individual properties for which asking prices have inexplicably been raised, I shake my head in disbelief, but they must be really in the minority.

When you consider that my list of unresolved inventory has the flaw of not excluding properties in which the seller truly changed his mind about selling, and resolved the situation by staying put, renting out the place, or some other means, then those properties do not show recent price reductions in the data. However, I am working on the assumption that those properties are a very small percentage of the overall list. For those sellers we hear have been going out on fishing expeditions, I assume they will keep trying to fish. There are lots of listings in my collection with no changes to the original asking price at all, even though the property has been listed for many months.

This second chart is of the Days on Market for the same unresolved inventory. I come up with a median DOM of 112 and an average DOM of 116.

One must consider again the effect of the records in which the homesellers really changed their minds, as discussed above - their entries would skew DOM upwards. But, there are also a bunch of records in my collection in which DOM is way understated. These are the ones that were first entered into the database at the end of September, since I took the records out of open house listings in the local papers, rather than online listings, and entered a listing date as the date of the paper publications, when in reality those properties were probably on the market for some time already. If I am lucky those two problems could cancel each other out, but over time I expect those properties with erroneous listing dates to get sold and drop out of the unresolved inventory, while the problem of homes that have backed out of the market remains.

Let's also look at how the asking prices distribute in this unresolved inventory. How does this compare to what I assumed about December inventory compared to December sales? One thing I notice is that December inventory category in the $450K-$500K has shrunk way down. In the December chart, inventory in the $450K-$500K range was about 12% of the outstanding inventory. Now, it has gone down - oops!

Maybe I goofed somewhere. Or maybe there has been a big uptick in sales in that category. Is there a way I can find out?

Reviewing my spreadsheet for December 2006 inventory versus December sales, I did find one error. Here is the corrected chart. Notice that the $450K-$500K category has now shrunk, and when you look at the light periwinkle colored bars, the shape of the graph looks very much like the February inventory graph.

Here is the December chart with the error:

If I take a sneak peak at January sales, this is what I find:

STREET                          SALEPRICE    SQFT    PCTRED    DOM
S.       Broadway       C          715000    1503       3.3    105
         Calle Miramar            1325000    2799       5.3     92
         Pearl                     615000     890      23.0    106
         Esplanade      103        607000    1359      24.0    221
N.       Guadalupe      A          815000    2253       4.7    100
         Garnet                    899000    2507       7.8    212
S.       Prospect       205        469000     977       7.1    110
         Pruitt                    570000     756       3.2     86
         Harper                    610000     756       8.3    161
         Ernest         A          979000    2320       1.6    103
         Mathews        C          755000    1885      24.1    390
         Vanderbilt     2          520000    1070       5.3     81
         Vanderbilt     4          510000    1070       9.3    103
         Marshallfield             579000     768       0.0     71
         Grant          2          562000    1598      16.0    204
         Mathews        3          610000    1710      11.5    204
         Vanderbilt     C          660000    1609      13.0    197
         Gates          C          620000    1974      12.9    143

         MED                       612500    1551       8.0    108
         AVG                       690000    1545      10.0    149
         MIN                       469000     756       0.0     71
         MAX                      1325000    2799      24.1    390

I notice that average DOM has gone up considerably, skewed upward by the sale of five properties on the market at 200 days or longer, including one of my poster children! Median DOM of 108 for sneak peak January sales is pretty close to the median DOM of 112 for inventory as of February 2.

Although with such a small sample size for January sales, it's really too soon to say definitively how everything played out in January.


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