If you read the previous entry you'll see that homes are now selling for around 93% of list price, that they were selling for 86% of list price last year. In 2006, when home sales were very vigorous, home were selling for 96% of list price. Why are homes now selling for such a relatively high percentage of list price? In this market, with the price of homes down, and the number of home sales down, why is there one metric that is so positive?

 

I believe that the answer is: sellers are now pricing their homes realistically for this market. That is, they are pricing their home at or close to market value. Buyers recognie these realistic prices and are inclined to buy at a price that is close to list price.

 

Here's some evidence for this theory.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This graph shows the average price per foor for all homes sold in Bellingham during the past 5 years. The red line is an approximation of the average decrease in price per foot over this time period. Notice that 5 years ago in 2006, the average price per foot was $190. The current price per foot of all homes sold is around $160. This represents a decrease of $30 per foot--about 16%,