Since 2003 the average sold price for a home in the Tucson Foothills has risen from $417,332 to a peak of $703,616 in 2006, a jump of 68.6%. Then in 2007 prices started to decline for the first time, and as of today the average sold price stands at $640,061, a drop of 9% from it's peak in 06.
Not too bad, given how things are going out there. Or maybe not too good depending on what side of the fence you're on, buyer or seller, bull or bear. In any case our price declines here in the Foothills have been modest compared to many other markets.
*Blue = List price, Red = Sold
But what the chart also illustrates is the widening gap between buyer and seller expectations. Things were going along nicely in 03, 04 and 05 with buyers and sellers pretty well aligned on home prices. But as the boom matured in late 2005 and early 2006, sellers continued to ask higher prices for their homes, while buyers were beginning to tire of the wild enthusiasm that caused multiple offers and over list price sales to become commonplace.
Since then the gap between buyer and seller expectations -
as seen in the ever widening gap between list prices and sold prices -has gotten wider each year. In 2005 homes were selling very quickly for 98.1% of list price. This year buyers and sellers are much farther apart, with homes selling at just 94.1% of list price.
But the real gap is even wider than that.
The MLS calculates the % of sale price/list price (%SP/LP) based on the most recent list price. Not on the original list price. And these days many homes are having price reductions, some of them multiple price reductions. So if a home is listed for $1,000,000, then reduced to $950,000, then reduced to $900,000, and reduced again to $850,000, and then sells for $820,000, the %SP/LP is calculated based on the $850,000 list price. So in this case that home would show up as having sold for 96.4% of list price.
Technically correct, maybe, but not a true reflection of the marketplace. If it were based on the original list price of $1,000,000 the %SP/LP would be 82%, and the blue List Price line up there in the chart would be even higher and with a wider gap from the red line.
So while sellers are adjusting their prices to try and better align them with buyer expectations, it seems that buyers have been moving more quickly to even lower price expectations.
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