For those who are just tuning in, Sunday Night Stats is a continuing saga that I started back in early January of 2008. Each week is a small piece of the whole, and often shows only those changes that were revealed in the week between posts. For a longer perspective of the Seattle Real Estate market, click the category for “Sunday Night Stats” for other posts in the series.
Last week I did a brief Snapshot showing that home prices appeared to have increased by as much as 10% in a very short period of time. This week I was testing how sales were doing in comparison to the new 2009 Assessed Values. Up until very recently, the mls was giving us the 2008 Assessed Values. Most people know that I use these in conjunction with other valuation techniques to determine offer prices for my buyer clients. As soon as I noticed the change to 2009 values, I started studying the relationship of the most recent sales to these new valuations.
To my surprise, the same 10% increase in prices appeared! I tested late 2008 and early 2009. I then tested the period immediately preceeding the escrows that would have been entered into just prior to the $8,000 Homebuyer Credit being passed. The 10% increase happened in a two week period AFTER the credit passed (allowing 30 days or more for those escrows to close). Given the % increase is the same as last week, using a completely different method, it seems pretty certain that the stimulus is stimulating more than we expected…but it could of course be very temporary. Time will tell.
Before you do this at home, see the end of the post after the charts. I will give you a few tips on how to utilize this type of information around any home you are making an offer on.
(Note: During this same time period of “increase”, “bottom” prices are still available on many homes. 3 buyer clients of mine achieved prices of 86%, 83% and 77% Of 2009 Assessed Values, during this same timeframe showing the Average at 100%. “bottom” is not a month or a day. Every day homes sell at different prices and different values. You do not “miss” bottom. You just have to be willing to find it OR make the choice that you don’t want it. Many people can afford to have their dream home and don’t want to deal with the tradeoffs of buying “at bottom”.
Bottom is not something you wait for, it’s something you put the extra effort into finding…or not.
A few notes. I entered dates at the end of March of 2009 and the beginning of April 2009, until I had about 10 homes. I did not pick and choose the homes to conform to an answer I was looking for. I simply closed the dates when the desired # of homes was obtained. Of course I’m using a small geographic area and the same area is used for all charts, with different timeframes. I did eliminate new construction, as Assessed Value information is not always available for those immediately after closing.
What you may find to be of particular interest is the Days on Market (DOM) and % of Asking Price, is not as good of an indicator of value, nor a reliable one. Review all three charts for all three periods (one is in a link at the end) as I think you will get a lot of tips on how to price and how to make offers, by studying the results of many people’s attempts at different means of pricing .
The results are really pretty much irrefutable, but just to be sure, I did a third set of data for closings immediately prior to the 30 day period following the Stimulus Package being passed. The values were slightly lower…the increase was ONLY in the very short period of time after the credit was passed. Pretty amazing results.
To convert the data to your specific area, simply gather the same information for sold property in a radius around your home or the home you plan to make an offer on. You might not be able to get OLP (Original List Price), but I think the results here show that using that as a basis is not all that helpful. The rest you should be able to get from Zillow or the King County Parcel Viewer, or a combination of both.
If you want the detail chart for the period at the end of February and early March, closings that were entered into before the credit past, CLICK HERE. The Average % was slightly under the second chart in this post for late 2008/early 2009.