October
22

In this housing market, not many positive records are being set. One notable exception comes as a great surprise to the casual market observer – length of time on the market. In this down market, well-priced home are selling in record time.

And time, as the old saying goes, is money.

Market is moving slower

With the torrent of down news about the housing market over the past couple of years, most people would expect that all homes are languishing on the market, just praying for a buyer to appear.

The market as a whole is certainly moving much slower than it did a few years back. The average market time for existing home sales now stands at 120 days, which is nearly 40 days longer than during the peak of the market in 2007.

But that picture alone is a bit deceiving; that’s not the whole story. A more detailed look at  today’s market reveals a different picture.

Overpriced vs. Well-Priced Listings

When we separate September 2009 home sales into categories of those that required a price reduction before selling (Overpriced Listings) and those that did not (Well-Priced Listings), we find that the Well-Priced Listings are selling in just 31 days.

CBM - Bellingham September Residential Sales

As you can see in the above table, a different story emerges for the Overpriced listings. They average 137 days on the market (nearly four and a half times as long!), and they are requiring an average price reduction of 14% (that’s a difference of $42,000 on the selling price of a home that’s initially listed at $300,000).

That extra 4-5 months of selling time hurts in a couple of ways.

The financial impact

First, these homes end up selling for less than they could have if they had just started off priced right. Our market, like all others around the country, has seen declining prices over the past two years. Since the peak in prices in 2007, the average sales price has dropped about one-half a percent per month. That means the 4-5 months of extra marketing time cost the seller an additional 2.5%, or $7,375 for the median priced home of $295,000.

The emotional impact

So, the financial impact of pricing the home right is significant. The emotional impact is also huge. Five additional months of keeping the home in show condition, of the feeling of being in limbo, and missing the chance to move to that next home that better suits the seller’s current needs, are also a big part of the equation.

What happens when it’s priced right… the first time

More and more sellers are beginning to understand these factors. In September, 45% of sellers priced their home right and sold in an average of 31 days. Still not a majority of sellers, but the percentage is up significantly since the start of the year.

The overpriced seller should not beat themselves up too much. In a changing market, it is sometimes hard to know what the right price is.  Sometimes it takes entering the market to get feedback from buyers to know if the price is right. The key to finding the right price in those instances is to quickly review the market feedback and then make a swift price adjustment to bring it in line with the market. When done, our market’s steady activity tells us these sellers will find a ready and willing buyer.