An Inexact And Unscientific Price Study
Brad_Davidson July 8th, 2008
June Sales and Future Median Prices
You’re going to hear it here first. Data Quick will be coming out with their sales figures for June in the next week but I’m going to try and beat them to the punch each month. I don’t know how my numbers are going to measure up in comparison with Data Quick’s far more detailed studies but I’m going to give it a shot. What I think will be very interesting is using pending sales to try and predict future median prices.
Here goes!! According to the totals on the MLS website, June home sales in Orange County totaled 2,176 residential properties. These are mainly resale homes as the majority of new homes are not listed in the MLS. The median sales price of these homes was approximately $475,000.
According to the MLS, May sales totaled 2,135 properties with a median price of $480,000. According to Data Quick and as published in the OC Register, there were 2,266 sales and the median price was $485,000. Given the disparity in the total sales numbers, I’m content with the $5,000 price difference and if the June number is within $5,000 of $475,000 it’s all good.
I’ve always thought that the data provided on homes sales was of marginal value. I’ve long realized that the sales figures as published by the media are a lagging indicator. The 2,176 sales in June are deals that were negotiated in April and May, some I’m sure in March. In essence the median sales figures are two months old.
As of July 7, 2008 residential listings, categorized as pending sales or in back up offers total 4,183 properties. I’ve been tracking this number for the past few months and find it interesting that there are typically twice as many pending sales and back up offers as there are closed sales for the prior month.
A far more interesting number I’ve been tracking is the median list price of the homes categorized as pending or in back up offers.
I wanted to come up with a median sales figure that would be more current and perhaps be a better market gauge than numbers that were essentially two months old. I first tracked the list price of homes in pending sales on April 31, 2008. This is the unscientific part because I’m tracking the price the properties are listed at, not the sales price. While unscientific, my first set of numbers hold up remarkably well. The median listed price of pending sales and back up offers was $475,000 as of April 30, 2008. The same price as I show for closed sales for the month of June 2008!
While I have read that the median sales price number has ticked up a bit, it’s not what I see in pending sales. For the 4,183 pending sales as of July 7, 2008, the median list price is $439,000. If that number were to hold up when the actual sales figures for August are released in September, it would be a continuing slaughter for the OC real estate market. I think the median number will be higher because there are a lot of short sales and REO’s in the pending sales that actually sell for over the list price.
Then again, when I first ran these numbers in April and came up with the $475,000 median, data Quick had just released the March numbers showing a median of $506,000. $475,000 seemed pretty low then too.
I hear Orange County is looking for a new real estate oracle now that Gary Watts has publicly apologized for being wrong. I’ll track these number every month and report here and see how I do.
So according to http://www.ocregister.com/mone.....-www-homes the median was 570k in last Sept’s report. That would be a 24% decrease YoY if you’re right.
Does that sound about right?
Chuck, Have you ever done an analysis based on average appreciation over the past 10-15 years tied to median income levels? If you take a mix of homes in most area’s at the 1995-1998 sales price, the numbers are interesting to digest when you use say a 3-5% annual apprecitation rate in comparison to where the prices are currently. I really enjoy the Realtors radio commercial indicating a hosue doubling in price over 10 years with the disclaimer at the end, which is obviously using the recent 10 years……. My math works out that the annual appreciation would need to be north of 7% annually… Assuming that we get back on track for traditional financing methods, is their any real traction on mixing the price appreciation and income levels to get a better picture?