A ‘qualified-buyers' market’
Last month my neighbors put their house on the market and sold it in just three days. They had multiple offers, and they obtained their listing price. Their quick-sale experience, however, was not that unusual for sellers during the month of September. Four of the nine houses sold in Madison Park that month went from listing to sale in fewer than 30 days, and the average number of days on market for all of the houses sold was just 91.
There was a clear-cut relationship between the quick selling properties and those that were least discounted from their initial offering prices. The quick sellers averaged a 2.4% difference between the listing price and the sale price, while the five slower-selling houses (one of which sold after 375 days on the market) were discounted 14.6% on average.
What’s the lesson, if any, from all of this? Dave Hale, manager of Windermere Real Estate’s Madison Park office provides this insight: “For the well-priced, market-ready listings there are buyers.” In his opinion, we are now experiencing a two-tier market, with one tier composed of properties that are “realistically” priced and the other tier priced out of line with market conditions. A major factor that’s impacting the market, he notes, is a lack of inventory. Indeed, there are only 76 properties currently on the market, compared to 94 at this time last year and 91 the year before.
Last month one seller accepted a 30.4% discount from the initial offer price after his house had been on the market only 77 days. This quick acceptance of market realities was not typical of sellers, however. During the last quarter, seven houses were sold after more than 200 days on the market. Six of those sellers took major hits relative to their initial expectations, accepting an average discount of 20.9%. One seller, whose house was on the market for over 500 days, was ultimately rewarded with a relatively small 10% discount from the initial offering price. Proving, apparently, that patience can be rewarded in selected circumstances.
Here is how the sales played out in the market during the third quarter:
Houses
Sales: 28
Median Sale Price: $1,420,000
Average Sq. Ft.: 3,746
Average Price per Sq. Ft.: $412
Average Days on Market: 136
Average Discount from List Price: 10.7%
Condos
Sales: 6
Median Sale Price: $535,000
Average Sq. Ft.: 1,035
Average Price per Sq. Ft.: $417
Average Days on Market: 175
Average Discount from List Price: 7.3%
The most expensive house sold during the quarter was a 3,200 sq. ft. 1940’s Cape Cod waterfront home in Washington Park, which after 251 days on the market sold for $4,400,000. That was an 11% discount from the initial offering price of $4,950,000. Only seven of the 28 houses sold in Madison Park during the period had sale prices of less than $1,000,000. Eight houses, meanwhile, sold for $2,000,000 or more.
So what’s the “take away” from all of this statistical information? Are we on a roll—or is it something less? Windermere’s Hale thinks the local market is now stable, telling us, “It’s my personal feeling that the worst is over.” Indeed, the 34 homes sold in Madison Park during the third quarter represent a 35% improvement over the 22 sales during the same period last summer. So in that respect, at least, things seem to be on a more even keel, with between 10 and 13 homes sold every month this year beginning in May.
But with interest rates and inventory now at historically low levels, will we soon see some upward pressure on market prices? That’s the question that potential buyers, potential sellers and real estate professionals are grappling with. Hale doesn’t pretend to know the answer. What he does believe, however, is that for the “qualified buyer” now is probably the best market in the last ten years.
Here’s a look at the current inventory in Madison Park (Broadmoor and Washington Park included):
Houses
Listings: 55
Median List Price: $1,875,000
Median Sq. Ft.: 3,720
Median Price per Sq. Ft.: $504
Average Days on Market: 125
Percentage with Price Reductions: 38%
New Listings: 15
Pending Sales: 10
Condos
Listings: 21
Median List Price: $550,000
Median Sq. Ft.: 1,106
Median Price per Sq. Ft.: $497
Average Days on Market: 116
Percentage with Price Reductions: 52%
New Listings: 4
Pending Sales: 2
Of the 55 house listings, there are only four on the market that are really priced under $1,000,000 (unless you want to be literal and include the four houses listed at between $950,000 and $995,000). So Madison Park’s reputation as “pricey” is certainly not endangered. The most expensive house on the market is a $7,950,000 “1930’s French-style estate” in Broadmoor. It has more than 10,000 sq. ft of living space on a half acre. Four of the other five most expensive houses in the market, however, are located in Washington Park, ranging in price between $6,335,000 and $7,895,000. The least expensive listed house is a “charming rental house” built in 1928 and located north of E. Madison St.
Condo prices, meanwhile, range from $1,75000 for a 2,100 sq. ft. unit in Washington Park Tower to $224,950 for a 595 sq. ft. unit in the condo building just south of Madison Park Beach.
The peak selling period for real estate has just ended, but there could still be a surprise before the year ends. Last year an incredible 16 sales occurred during December, making up for a fairly lackluster couple months earlier in the quarter. With only 12 pendings at the end of third quarter this year and only 76 listings, it will be tough to end 2011 in such a spectacular fashion. At this time last year there were almost 100 homes on the market.
[Photo is of 1821 41st Avenue E., a 2,300 sq. ft. house priced at $759,000, listed by Cathy Millan, Windermere Real Estate. This house went pending after only two weeks on the market. Photo by Matt Edington. Thanks to Wendy Skerritt of Windermere Real Estate for sales information used in this report and to Redfin for listing data.]
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