The problem with your methodology has nothing to do with the median versus mode differentiation. Your error is that you are taking information for entire twelve month periods and attempting to utilize it to show current price trends. That is you are taking ALL of 2006 and comparing it to ALL of 2007.
But the reality is that the data in the subsets changed during the stated period â€“ prices in the later part of 2007 where different than the earlier part of 2007. Your may have missed it but a dramatic credit event took place in mid-2007 which impacted the market. Your results are further skewed by the reality that sale transaction volume slowed dramatically in the later part of 2007. Therefore, your â€œdataâ€ for 2007 transactions is more heavily weighted towards early 2007 transactions (when prices where higher) to the end of 2007 (when prices where lower). Further compounding your â€œanalysisâ€ is the lag time between a purchase agreement being entered into and a closed sale. Closed sales in February of a year actually more closely reflect the market climate about 6 to 8 weeks earlier.
For these reasons, when analyzing trends, those more statistically trained, would utilize a smaller time period for a comparison. That is, one would compare sales transactions from February â€™07 to February â€™08 to analyze a year over year changes. This methodology is imperfect, as the sales mixture may have changed from the data sets. However, it is much more useful of show trends. The following entities have reviewed data as to price changes â€œyear over yearâ€ for Orange County and all are showing a material price decreases. I also provide their measuring date which are now several months old: Case-Shiller (LA/OC)-13.70% Dec. â€™07; DataQuick -16.30% Feb. 22; First American (LA/OC) -15.43% Dec. â€™07; Global/National City-10.97%4q/2007; CAR -11.60% Jan. â€™08. This is â€œyear over yearâ€, prices are even lower today and from the peak.
Further prices decreases appear almost certain given the number of adults with jobs is declining, the number of home buyers is at historic lows, the number of sellers is more than twice the norm, forecloses and notices of default are at records levels, and credit standards are continue to tighten (pulling even more potential buyers out of the market). Simply stated, the real estate bubble will continue to deflate.
Most people are still in denial. Buy when they are in a panic. We're about 2 years from that stage.
What is owed and what the true value of the property is, has nothing to do with what it will sell for .. -or- what it "should" sell for ... if someone is buried in their home, then it's probably time to be making an offer down the street.
Values are based on current market conditions, not payoffs .....
The market value of a home is a price a buyer is willing to pay AND the price the seller is willing to let it go for. Just because the headlines say that the streets are bleeding and homes are down whatever % doesn't mean a seller has to take any offer. It has to do with their motivation. They may not need to sell. They may be willing to see if a buyer will love the location, condition, etc... enough to buy it at the price they are willing to let it go for.
Prices in Garden Grove came down about 8% last year. Your offer was about 14% below asking. The average SOLD price compared to average list price shows a difference between -0.60% and -4.41%. Unless the price of this home is waaaaay off of the comps, your offer was waaaaay off of what is really happening in Garden Grove. There are a lot of areas where a 14% lower offer would be a great offer and one that a seller should take. Garden Grove isn't one of them when you look at the real numbers.
The sellers came down about 4%, which is perfectly in line with reality. And yes, sales volume is still down from the peak, it had nowhere else to go, but homes are still selling. 53 homes sold in Garden Grove last month and it will pick up as we move into the normal seasonal upswing. A lot of buyers are getting off the fence because of the new conforming loan limit changes. As soon as the median prices are posted by HUD, we will still a nice increase in the number of sales because affordability will increase, especially in the area you are looking. (More competition for you, will that motivate sellers to continue dropping their price??? Probably not.)
At the price range you are talking about, I assume it is one of the most desirable areas such as Garden Park where other buyers will head first in their search just like you did. You need to decide what this property is worth to you. If you don't feel it's worth anything other than $775,000, than move on and find a seller whose motivation matches yours.
Remember, a house is worth nothing except what someone is willing to pay for it. Even the recent sales of similar houses (which is what realtors use to come up with the price) don't actually indicate "the true" price of a house, just how much someone has paid for a similar house in recent months.
So, why did you offer 775,000? Was it because similar houses have sold for 760-800k in the last ~3 months? Or was it because you figured since it's buyers market and such why not save some 124,000?
I don`t mean to be the bad guy here, however maybe it is in the delivery of your offer, or the presentation.
The seller gave up 39K and you balked. Is the home only worth 775K is that your final price.
When it was a sellers market, they would take all the offers and tell the buyers "were are going to wait a few day`s for more offers to come in" The Sellers played the buyers against each other.
Now it`s a buyers market.
If 775K is your final offer, than tell them 775K is my final offer and by the way I have placed an offer on this and that house also.
Play the sellers against each other.
And another thing, you are taking this to personal.
"what are sellers thinking these days? This is a down market! Sellers are in lala land they think it is still 2006 pricing. We decided not to counter and let it sit for another month or two than come back and get a better price."
Wrong, you should at least counter 5k. Keep it alive. Don`t expect to come in 125K off and for them to say sold.
This depends on a few things ...
How much homework the seller has done .. and how much homework the buyer has done.
We all know California prices have been psychotic for a long time, so you as a buyer should know what the homes were doing 16 months ago, 6 months ago and what the homes are doing now in that particular neighborhood .... you should also know the balance owed on the property.
Check the comps .. but you better be "walking" through the comps and actually seeing and feeling and not taking the word of the paperwork or the agent, Brazilian hardwood floors might be worth a little more than orange formica (maybe)....
See how many days the property has been on the market (dom) - that means "real time" .... not it's been on the market since last June and it's on it's 3rd realtor and it only "shows" 33 days on their MLS ....
I'm not saying this property is worth the money (because I have no idea) but new sellers get bad information thrown at them all the time ... if nothing else, an agent might list them just to have another listing ... but, this one might be 3 weeks on the market and overpriced by $100,000 ... or, this one might be overpriced because the owner is on his 2nd HELOC and his 4th wife.
You as a buyer, should have 6 or 7 houses in your briefcase when you go on the real estate market, and those you've been researching for the last 4/5 months and know all the background that goes with them .. when this one didn't workout, you should have been bidding in the next home ...
I never saw I home I couldn't live without....
Good luck and happy hunting.!
If you are shopping to get a home at a drastically discounted price such as approx 15% like your offer off $775k on the $899k property then you can still achieve your goal. Those deals are out there. But be prepared for 2 things. 1) there are always other buyers that can beat you out on price 2) seal beach is very competitive and you may want to consider less competitive markets for your buying strategy
My first question to you would be are you working with a realtor?
If you are he or she should be able to help you determine what fair market is.
If you are not working with a Realtor , that should be step one.
If you really want the home, sitting on the sidelines may lose you a home you love. A offer could come in any time. I would suggest getting a good Realtor and Have he or she negotiate your offer.
Until prices come down to normal levels will we be able to buy. And we have 100k to put down. It is just
crazy - Sellers are still trying to get 2006 prices in many areas.
Anyway, I was just curious to see if you had found a great deal since last winter.
You should have stopped after "your price was too high."
If you house sits on the market long enough to get forclosed on......Your price was too high. That may very well have meant you bought above your means. It might mean you are just walking away. It surely does mean you wanted more $$$ than the market would bear though.
So homes being foreclosed on have nothing to do with people buying above their means? There are plenty of folks who are not in foreclosure, yes, even those who bought in the last 3 years.
I'd say your seller is either hoping to win the lottery by having that one perfect buyer, or they can't sell for lower because the bank actually owns the home. Either way, It'll be fun to see what the house is worth in a few years.
San Bernadino County was the only county in Southern California to decline into double digit territory from 2006-2007 with an average price per square foot drop of 12%. Orange County actually showed a 1.5% increase in price per square foot because 5 communities posted gains in price per square foot. (Dana Point, Laguna Beach, Newport Beach, Newport Coast and Villa Park)
Check out the web reference below to see a city by city comparison of price per square foot from 2006 - 2007 in Orange County.
The data was obtained from all single family home & condo sales reported to the MLS for those years.
Also, keep in mind that some sellers have no choice but to list the prices high, because their mortgage is also high. What if your seller refinanced in 2006 and needs to sell at $850,000+ to repay all their mortgages and closing costs?