With low supply and high demand we see the unusual situation where the average selling price exceeds the average list price becoming more commonplace. Here is a list of all the ZIP codes where this happened in September for single-family detached homes:
- Casa Grande 85193 - average sales price 102.29% of average list price
- Phoenix 85031 - 101.49%
- El Mirage 85335 - 101.37%
- Mesa 85210 - 101.28%
- Tolleson 85353 - 101.17%
- Phoenix 85051 - 101.15%
- Chandler 85226 - 100.92%
- San Tan valley 85143 - 100.91%
- Mesa 85204 - 100.86%
- Arizona City 85123 - 100.84%
- Glendale 85302 - 100.84%
- Avondale 85392 - 100.83%
- Mesa 85208 - 100.78%
- Chandler 85225 - 100.78%
- Gilbert 85233 - 100.74%
- Mesa 85203 - 100.72%
- Glendale 85308 - 100.67%
- Phoenix 85017 - 100.65%
- Avondale 85323 - 100.62%
- Glendale 85304 - 100.61%
- Chandler 85224 - 100.60%
- Phoenix 85037 - 100.59%
- Surprise 85388 - 100.54%
- Gilbert 85295 - 100.53%
- Surprise 85379 - 100.52%
- Phoenix 85043 - 100.50%
- Phoenix 85033 - 100.49%
- Phoenix 85029 - 100.46%
- Maricopa 85138 - 100.44%
- Phoenix 85027 - 100.44%
- San Tan Valley 85140 - 100.30%
- Gilbert 85234 - 100.29%
- Peoria 85345 0 100.27%
- Goodyear 85338 - 100.26%
- Mesa 85209 - 100.21%
- Peoria 85381 - 100.21%
- Phoenix 85053 - 100.19%
- Gilbert 85296 - 100.19%
- Buckeye 85326 - 100.19%
- Mesa 85212 - 100.16%
- Glendale 85306 - 100.16%
- Phoenix 85008 - 100.13%
- Surprise 85378 - 100.10%
- Maricopa 85139 - 100.04%
- Phoenix 85044 - 100.03%
- Phoenix 85083 - 100.02%
- Glendale 85301 - 100.00%
That is almost one third of all the ZIP codes in Greater Phoenix.
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During the crash ironically we would see some of this - where a few entire zip codes had average closed sales over 100% of average list price. However, ironically, this tended to be in zip codes with a predominance of bank owned properties! How can that be?
Those of you who were around then will recall banks would list their foreclosed properties based on a broker opinion of value (BPO's). If they didn't get it sold in a week they'd lower the price 5%...sometimes by the week! Unlike sellers, banks are not emotional!
The net result: massive investor feeding frenzy - hence the phrase 'first in, first out' - where some of the most distressed areas become the hottest areas.
Today, as mentioned above, we're seeing almost a third of all zip codes in Metro Phoenix averaging over list price sales. But, of course, these are not bank owned distressed situations. Today it's sheer massive demand outstripping supply.
You're hearing this ad nauseum, but the value in this Daily Observation is having the 'evidence' to prep my buyers.
Where this info can be misleading and you need to apply some sobering reality:
My sellers are hearing about or seeing this info and might get overly optimistic. Looking at zip codes is a broad brush. Managing unrealistic expectations is a chore...but part of the gig to be sure.
2 helpful things I do to manage overly optimistic sellers expectations:
1. When you're running your comps preparatory to taking a listing, take that group of sold comps through FlexMLS's Buyer Statistical CMA (see sample below) -you see the average Sale/List Price ratio column (I call the 'trading range'). In other words, the difference between average list price and average sales price specific to that market segment. Typically it will be in the range of 2-5% - the average amount sellers are coming down in negotiations. It's a smart exercise, as it will quantify what's happening in that specific market, so you can make recommendations to 'competitively position' accordingly.
Note: On the buy-side the exercise above can help inform reasonable offers in certain market sectors.
2. In the uber high end, check the Listing Success Rate using the Cromford Tableau Charts dropdown menu posted on our STATS page. You may find that a significant percentage of high end properties still don't sell within their listing contract period (listing success rate). For example, in the graph below we're looking at the percentage of properties of $3M that aren't selling in their contracted listing period - does it surprise you that the percentage not selling is diminishing, it's still about 30%!
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