Friday, December 07, 2007

Preliminary look at November 2007 Redondo Beach sales

Using sales records from the Manhattan Beach Reporter, I've been trying to scrape together a dataset for November 2007. Zillow is pretty worthless. The state of sales data is fragile and precarious. Keep that in mind, and ignore October. (My October 2007 sales data didn't fare so well, possibly because I didn't even know MBR was printing sales records until too late to retrieve them out of the hard copy editions which we toss out weekly.) Notice that median price is up above $800,000 again, which is sort of where I would expect it to be. However, the November median hasn't drifted above the September median. Average is back in line with where it was in September. Interestingly, when compared to early this year (May), minimum sales price is getting more minimum and maximum sales price is getting more maximum. Is this market suffering from bipolar disorder?

STAT     MAY 2007   JUN 2007   JUL 2007   AUG 2007   SEP 2007   OCT 2007   NOV  2007    
records        91         62         78         51         68         44          37
MEDIAN   $777,000   $764,500   $860,000   $850,000   $857,000   $755,000    $832,500
AVERAGE  $855,228   $830,711   $880,279   $867,925   $935,506   $770,416    $933,956
MIN      $453,000   $485,000   $359,000   $365,000   $369,900   $369,900    $379,000  
MAX    $1,640,000 $1,565,000 $2,299,000 $1,510,000 $2,400,000 $2,560,000  $2,500,000

I will throw in here that the median original asking price on these sold properties in November was $864,500, and the average original asking price was $997,765. I will compare these numbers to outstanding inventory numbers at the bottom of this post.

Sales by square footage have been consistent, with the heaviest sales volume in the 1500-2000 range.

What I have been calling DOM (days on market) is a little misleading. A realtor would define that as the time from when a property is listed in the MLS to the time it is sold, and that is only from the most recent relisting up to the time of sale. Maybe I should call my measure "total time spent hustling a property." With some new construction especially, I've noticed listings in Craigslist for properties not in the MLS. So I've taken the Craigslist posting date as the date listed and have included those properties with everything I find in ZipRealty.

The other problem with my measure of "total time spent hustling a property is the data source (Manhattan Beach Reporter). The MBR lists sales that close escrow for the week but don't give specific closing dates for each property. So I've been taking a date at the beginning of the week to estimate the date of sale.

Even though I've been guessing closing sale dates, my calculations of DOM have been consistent with what I've calculated for previous months. The median time spent hustling a property is about 3.5 months, and the average time spent is nearly 4.3 months.

How much did the November 2007 Redondo Beach home seller have to reduce his price in order to make a sale? Median and average percent reductions are now both over 5%, and the maximum reduction was nearly 14%.

I ran an outstanding inventory snapshot through the end of November to see how the inventory compares to the current sales data. This is what I have.

            November sales       Outstanding inventory

orig           $864,500             $859,000

sale or        $832,500             $835,000

Do you see what I am seeing? At the beginning of this year sales and outstanding inventory were pretty far apart in terms of how they perceive the reality of valuations - the percentage difference was in the teens. Now it appears that they've met up in the same general price region. I started noticing in September that inventory was coming in to line with the reality of sales. Now that they've met, will we see a violent move by one group of sellers in a particular direction, like two billiard balls that have collided? For instance, will the January-February home sellers ignore the lessons of 2006 and 2007 and try jacking their asking prices up 15-20%? (I doubt it, but that's what I mean by a violent move in a particular direction.)

For what it's worth, the median percent reduction on outstanding inventory no longer sits at 0%; it is now 1.2%, and the average reduction is 3.3%. The difference between a successful sale and a listing that rots could be a price reduction of greater than 5%.

Out of my outstanding inventory of 807 records, some 47.7% show no price reductions or a price increase from the original asking price, while 52.3% show a price reduction.

Sure, median price has gone up this year, but we are aware of the factors that are skewing this. The truth is that this market is looking sick and if the market were doing well the price reductions would be practically non-existent.


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