Wednesday, October 24, 2007

Unresolved inventory stats in Redondo Beach

It's time to take another inventory snapshot of what I've got in my inventory database.

Rather than call it unsold inventory, I call it "unresolved" inventory, because some of these properties could well have been sold, but no sales record appears anywhere to clue me in. A few have also been rented out, and selling has been put on the back burner for the time being. So my data is not perfect in that regard. At the moment I have what I think are 870 good inventory records.

Of my unresolved inventory, 17.8% of it is new construction.

As far as changes to asking prices, 1.2% of inventory show price INCREASEs. Other price changes are summarized here:

50.1%      0-2.5%   reduction
16.8%      2.5-5%   reduction
 8.6%      5-7.5%   reduction
 5.3%      7.5-10%  reduction
 3.3%      10-12.5% reduction
 2.8%      12.5-15% reduction
 1.1%      15-17.5% reduction
 0.6%      17.5-20% reduction
 0.2%      20-22.5% reduction
 0.3%      22.5-25% reduction
 0.2%      27.5-30% reduction

Obviously if they aren't selling, these properties are staying on the market awhile. Median DOM is 163 and average DOM is 197.

So far I have NOT been able to plot a relationship between time on market and percentage price reduction. I wonder if that says anything about the uncertainty of price direction.

Square footage tends to run a shade higher on unsold properties than on sold properties. For this set, median sqft is 1831, average is 1929.

And now here's a rather interesting part. The gap between what sellers want and what buyers are willing to pay seems to have closed up. Here is what the sellers of this unresolved inventory want.

           ORIG ASK     CURRENT ASK
MEDIAN     $852,500     $838,950
AVERAGE  $1,001,165     $969,730
MIN        $369,700     $360,000
MAX      $4,999,000   $4,999,000

If you recall my prior post about September sales, I calculated a median sale price of $845,000 and an average of $948,814. These numbers are pretty close to the area of current asking price on unresolved inventory. In a post early this year, I did a "fantasy gap" calculation and showed the current asking price of February inventory at a median of $849,000, while February sales were at a median of $745,348. That was quite a gap, and it's closed.

If buyers and sellers are now in the same ballpark in terms of their perceptions on property valuations, what does this mean going forward? Will sale "viscosity" improve because of this convergence? Or does that mean that, like two billiard balls meeting and colliding, opinion is about to diverge again?

Unfortunately, what I am not showing here is the sales trend according to the square footage sold. From the numbers above, it appears that buyers have been the losers and have caved in to the asking prices of the sellers, when in fact we know that "lower end" properties have been undergoing price reductions and potential buyers are now out of the market since they cannot get mortgage loans.

To show long term trends (even since, say, 2004, by quarter) of properties at a particular square footage, I would need to fix my sale records with the proper square footage - which is a substantial project in itself. Too many of them contain the old square footage of a teardown, or don't reflect additional square footage from a remodel. Maybe when I have some time I can tackle this.


Blogger bearmaster said...

So far for October 2007, new inventory for Redondo Beach has been coming online at the rate of 2.7-2.8 properties a day.

9:22 PM, October 24, 2007  

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