In this graph from Miller Samuel for Curbed.com, 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 Curbed.com, 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.
As I interpret Miller’s explanation, the black line represents the difference between the asking price just before the property went into contract and the sold price–that is, the listing discount. Says he:
The higher the line, the greater the spread between the list price and sales price.
The red line is another formulation of the listing discount, this one the difference between the original listing price and the contract price.
In early 2009 both metrics spiked in a fairly consistent manner, which meant that prices were falling sharply and sellers were behind the market in setting their prices. So buyers and sellers had to travel a lot farther to have a “meeting of the minds.”
More recently, the appraisal executive continues, the spread between asking and sold prices has been very high, but the difference between the original listing price and the final one has not.
His findings are consistent with what I have observed anecdotally. As I think back on the columns I write in my e-newsletter critiquing the properties I visit during the week, I recall railing against offering prices that I described as wildly off the wall for much of last year.
Lately, I’ve been more temperate, noticing that the difference between what sellers wish to receive and what the buyers are willing to pay has narrowed considerably. Should this trend last, we will be in a balanced market for the first time in a long time.
However, whether the trend will endure is very much an open question as sellers perceive increased buyer willingness to commit.
Hmmm, a balanced market for a change. That’s the kind of market I like, one that is more stable and more fair to all concerned.
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Licensed Associate Real Estate Broker
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Charles Rutenberg Realty
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