Last month we looked at whether buyers were back. We discovered, depending on the location, the market was 20–40 percent more liquid when comparing the last 12 months to the previous 12 months.
Location is very important when establishing value, but savvy agents and consumers will often look beyond the basic comparable sales and the usual trend charts to evaluate what is happening in our complex market.
I find that the various price points within the luxury market often react differently. The higher the property price, the fewer the buyers. How many fewer buyers can I expect? Higher priced property can take longer to sell, but how much longer? To answer these important questions, I find it helpful to separate the market into price bands, or ranges. Breaking out information by sold price point lets us drill down into the statistics in new, meaningful way.
One metric I like to track through price bands is the number of real buyers. What is a real buyer? A real buyer is one who writes an offer, ratifies a contract, completes inspections, and shows up at the closing table with funds. Tracking real buyers is another way of tracking sales. Of course it is interesting to also consider those shopping around, but not all who look will write offers or close a deal.
A five-bedroom, five-and-one-half bath condo at
2006 Washington #4 (near Gough) recently sold for $7 million
Photo: courtesy of www.socketsite.com
In general, there are significantly more real buyers/sales for property up to $1.5 million (142 sales for all property types in the last quarter). The numbers drop off considerably over this threshold. So if your property is worth around $1.5 million, consider pricing it in the more active price range of $1 million to $1.5 million, instead of the $1.5 million to $2 million range. There are three to five times more buyers for property priced under $1.5 million, so it might be advantageous to tap into this larger market.
How long will it take to sell your property? If there are only a handful of buyers each quarter, it’s reasonable to expect your property will likely take longer to sell.
Also of interest from July through September this year is that although there were some sales (23) of single-family homes between $3 million and $5 million, there were no sales of condos, lofts, TICs, or co-ops in this range.
For the curious set, here are the sales over $5 million for the third quarter of 2010:
2841 Divisadero (near Union) sold for $7,581,250 (asking price was $8.5 million)
2006 Washington #4 (near Gough) sold for $7 million ($1.5 million under asking price)
Matthew Borland is a managing broker and partner at Zephyr Real Estate and the past president of the San Francisco Association of Realtors. E-mail: firstname.lastname@example.org