Sellers tamp down their irrational exuberance

In this graph from Miller Samuel for, the black line represents the listing discount from the last list price (the final asking price before the apartment went into contract). The higher the line, the greater the spread between the list price and sales price. The red line represents the listing discount from original list price as well as sellers' initial hopes for what their properties will bring. Click to expand.

The estimable Jonathan Miller was curious about  the difference between  asking prices and contract prices, the listing discount, measured as a percentage, from the end of 2002 to the end of last year for Manhattan condos and co-ops.

It is evident from the huge peak on the right side of the graph, created for, that sellers were grossly unrealistic about the value of their properties at the beginning of 2009.  Although that information is hardly news, it’s nice to see their irrationality documented. Continue reading