Lessons from the RREAR Pt. III

We pick up here where we left off, with the third part of our new series: Lessons from the RREAR, where we dig deeper into the data found in our Annual Residential Real Estate Activity Report.

Today's subject: Percent of Original List Price Received at Sale.

The higher the Percent of Original List Price Received at Sale, the more sellers are effectively asserting control in the negotiation process.

With the Twin Cities and national housing markets firmly in the midst of buyer's markets, there's been a significant downward pull on prices. Inventory was at record high levels throughout 2007 (though flattening lately) and home sales slid further down.

So naturally, motivated builders and home sellers offered larger discounts from their original asking prices last year to compete with one another for a relatively smaller pool of buyers. There was additional downward price pressure from the increasing market share of foreclosures and short sales.

Below are the Top 20 Areas in Percent of Original List Price Received at Sale for closed sales in 2007. This is where buyers, builders and banks were receiving the closest to their original asking prices in the metro:

Code	Area	% of Orig. List Price Rec'd
604	Mendota/Lilydale/Mendota Heights	97.7%
342	Hutchinson	96.8%
302	Mpls – Central	96.6%
628	Southern Dakota County	96.5%
300	Mpls – Calhoun-Isles	96.3%
396	Chanhassen	96.2%
366	Champlin	96.1%
769	Anoka	95.9%
362	New Hope	95.8%
640	Shakopee	95.8%
744	SP – Como	95.7%
379	Bloomington-East	95.7%
644	Savage	95.7%
767	Coon Rapids	95.7%
752	SP – Highland Area	95.7%
705	Lino Lakes/Hugo/Centerville	95.6%
764	Blaine	95.6%
740	SP – Crocus Hill	95.6%
746	SP – St. Anthony/Midway	95.5%
771	Spring Lake Park	95.5%

And here are the Bottom 20 Areas. These are the parts of the metro where buyers chose to accept lower final sales prices relative to where they started:

Code	Area	% of Orig. List Price Rec'd
605	Sunfish Lake	81.0%
305	Mpls – North	84.9%
301	Mpls – Camden	89.0%
742	SP – Central	89.5%
714	SP – Phalen	90.4%
720	SP – Southeast St. Paul	91.8%
721	Lakeland/Afton/Denmark	92.1%
398	Victoria	92.5%
716	SP – Hillcrest/Hazel Park/Daytons Bluff	92.6%
784	Northern Chisago County	92.9%
381	Lake Minnetonka	92.9%
368	Hennepin-Northwest	93.2%
738	SP – Home Croft/W 7Th	93.3%
727	Stillwater/Bayport	93.3%
632	Rice County	93.4%
660	Goodhue County	93.4%
648	New Prague	93.5%
600	West St. Paul	93.5%
646	Jordan	93.6%
770	Hilltop/Columbia Heights	93.6%

For a look at the geographic boundaries of these MLS areas, visit here. And stay tuned in the weeks ahead for more Lessons from the RREAR.

Comments

[MT]

the issue with this stat is it can easily be manipulated (with no penalty) by an agent that can change this LP to close to the SP just prior to the sale being recorded. With this type of manipulation available, I don't put much stock in the stat (even if it hasn't been changed)

[Jeff Allen]

MT, your concerns about this stat are legitimate. Agents will re-list properties whenever their existing contracts expire, and we don't currently have a way to look back at the original list price of previous listing contracts.

With that said, agents have been re-listing for years, so we can still make historical comparisons over time and can still compare different geographic areas.