House hunters seeking bargains: Here’s some more depressing news.
You’ve seen all of the reports about the limited inventory of cheaper homes. For example, ReportsOnHousing shows 1,208 homes listed for $500,000 or less on Feb. 25 – down 24 percent from a year ago.
That kind of supply shortage means sellers don’t have to discount much to move a property in Orange County’s most affordable neighborhoods.
ReportsOnHousing author Steve Thomas has an intriguing analysis in his biweekly breakdown of selling information from broker-listing networks: the ratio of selling price to the last list price. These numbers translate to how much discounting a buyer can expect a seller to make to get a deal done.
I tossed January’s selling data into my trusty spreadsheet to see how the sale-to-list pricing ratio changes by level of home prices. When I ranked the 44 Orange County communities that Thomas tracks by average listing price, I found that the lower the price, the lower the discount.
In Orange County’s 15 most-affordable neighborhoods, January’s average selling price for existing housing was $448,000 – or 98.1 percent of the average list price. That means sellers conceded by $8,400, on average.
Contrast that to a countywide average of 97 percent, or a $24,000 cut. Worse, look at housing’s upper crust. The 15 priciest neighborhoods in Orange County had an average sales price of $1.26 million in January – or 96.1 percent of last listing price, a typical $49,000 price cut!
Look at the discounting extremes by community:
• Portola Hills house hunters had it worst, getting the smallest discounts in January and paying 99.5 percent of list price – or just a $2,500 price cut on an average sales price of $491,125.
• La Habra was next: Buyers paid 99.4 percent of list on an average sales price of $478,326. Then came Aliso Viejo at 99.3 percent of list on homes selling for $575,893.
At the other end of the spectrum, beach-town sellers had to bargain pretty hard.
Corona Del Mar buyers found the highest discounts with January sales running 92.3 percent of list price on a $3.3 million average sale – that translates to a typical $254,000 price cut!
Newport Coast was next: 94.4 percent of list with an average sales price of $1.88 million. Then came Dana Point at 94.5 percent of list with an average sales price of $1.68 million.
Like it or not, low-end house hunters have little time to ponder any discounts offered.
Consider Thomas’s expected market time data – counting how many days it would take to sell the current inventory of listed homes at the current pace of new escrows opening:
Neighborhoods with the cheapest sale prices in January started the year with average market time of 64 days – almost half of the 123 days required to sell a high-end home.
It’s no fun to be a bargain-seeking homebuyer these days. If you flinch at hard-line negotiating with sellers, you risk losing the deal.