Please welcome real estate appraiser, Curbed NY graph guru, blogger, newsletter writer, and columnist Jonathan Miller to Curbed LA. For his inaugural column, he looks at the connection between the length of time a listing stays on the market and the hit it'll take on its final sale price.
Since Los Angeles is all about relationships and you don't know me (yet), I thought I'd better get started on my first Three Cents Worth Column for Curbed LA. I've been compiling and analyzing data for Douglas Elliman's market report series for more than 20 years and one thing I've learned: there is nothing better than a good chart. For this column I thought I'd explore the relationship between days on market and listing discount and how that is changing.
There is clearly a relationship between how long a home takes to sell and what discount or premium was realized between the list price and the final sales price. When a listing sits for a long period of time, it's a function of how close the listing price sits to the actual value of the property. I looked back to 2007 (before the financial crisis began) and presented the average listing discount (the percentage difference between the list price at time of sale and the sales price) and the average days on the market (the number of days between the last price change to the contract date).
These lines represent the average listing discount for homes that sold within a certain time period. Consistent with the tight housing market—rising prices, rising sales and tepid inventory growth—the overall listing discount has been declining steadily since 2009, but leveling off in the past few years.
It has been my experience that when a homeowner prices a property at what they want to sell it for, rather than what is is worth, the home takes longer to sell and the discount is larger. Homes that are priced closer to market sell much faster and, one could argue, have a better chance at selling for more than the reasonable value might be. In the past three years, a home priced to sell quickly usually resulted in a bidding war or had more buyers look at the property. Just look at the purple line for 120 days and the magenta line for 30 or fewer days since 2009—much more of a frenzy for homes priced to sell.
· Listing Discount versus Days on Market [L.A. Condos + Single Family Sales] [Miller Samuel Inc.]
· Jonathan Miller [Curbed LA]