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Statistic Geeking – How Low is Too Low

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Every once in a while, I fall down a statistical rabbit hole. And today was one of those days.

I had another agent who was trying to figure out how to explain to their client about why the low offer they wanted to submit was not really a good use of anyone’s time. As a buyer’s agent, I am always wanting to get the best deal I can for my clients…and will negotiate my tuckus off to do the best I can for them.

However, after years of experience and a knowledge of statistics, I know that some offers are just too low to even get a response. So the buyer wastes time, their agent wastes time, the seller’s agent wastes time, and the seller is insulted and has their time wasted.

So today I ran some actual statistical probabilities on what the chances are a low offer will be accepted. Using mean, standard deviation, T-tables and the internets….this was my conclusion.  Of course this can change as the market changes…so this is for Josephine County for July of 2018. Sample size of 119 sales…so significant.

Sellers mindset in our market is they have to decide to lower the price, they don’t accept low offers.

So the average sales price to list price was 96.98%. However the sales price to original list price was 94.61%.

There is a 33% chance that an offer at 96.98% will be accepted, but only a 9% chance that an offer of 94.61% would be accepted. Even though that is the average overall from the original listing price.

So deeper down the hole.  Here are the probabilities.

At 92% of asking price the odds of acceptance are 4.5%

At 87% of asking price the odds of acceptance are .27%

at 82% of asking price the odds of acceptance are .006%

at 78% of asking price the odds of acceptance are .0001%

So when looking to make an offer anywhere below 90% of asking price, the odds are so long!!!!!

As I council my clients….I want them to know that it isn’t me who wants them to pay more for the house. The best deal I can get them is what I want. But when I say an offer is too low to be considered, I now have some statistical background and facts to back that up.

Thanks for falling down my rabbit hole if you got this far.

Winter, When the Serious Shoppers Come Out

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While it is true that many home shoppers stop looking during the winter, many shoppers still are active. 

In the Rogue Valley, we usually do not have to deal with snow or slick roads to hamper home shopping.  The biggest issue I usually face in the winter is having enough daylight to show properties to those people who work full time jobs. Starting right about now, by the time it is 6 O’clock, it is hard to see outside. And that will only continue to be a smaller window of time as we approach Winter Solstice. 

Reasons why shopping in the winter is tricky

  • Roads are slick
  • It gets dark early
  • Don’t want to change schools for children mid-yearRed bird house hanging outdoors in winter on tree covered with snow


  • Fewer homes on the market than in the spring
  • Properties are looking their “worst”

Advantages to shopping in the winter

  • Houses look their worst…they only get better from there
  • Sellers may be more motivated
  • Less competition from other buyers
  • Might be more likely to take contingency offer
  • Home inspections more likely to find bad gutters or water in the crawlspace

MILLENNIALS BUYING HOUSES

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Wow, I just got the most extensive research I have ever seen on the effect Millennials are predict to have on the housing market.
I could spend a day just digesting all of the info included in this report.
Some of the most interesting facts have to do with Income projections. Wages have been flat, but show an increase in one category. Women ages 25-34 with college degrees. I like that news since I have a child headed into that demographic. It also seems to show that due to the economic crisis they were raised through that they are more risk adverse than the previous generation. So they will be more cautious when they do enter the housing market to not overextend.
90% of young renters say they want to purchase a home.
Millenial Housing

 

I think the report is summed up pretty well in this infographic.

 

I personally am excited to work with the Millennial Generation. I have a few clients I have worked with in the past year in that demographic, and they are a pleasure to work with.
In many ways I think the Great Recession was a benefit to this upcoming generation, and that the lessons they learned by being young during it will help them be successful going forward.
And the technology that they grew up with I believe helps with the real estate process, and I am looking forward to many years of working with the younger buyers and sellers.

We’re Number 2

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An article posted on CNN Money today listed the top 10 places in the country that they are predicting a housing price rebound. And Medford Oregon was listed as the number 2 spot town in the country.

Predicting economics seems to me to be like fortune telling. One can get lucky, and get it right some of the time, but it is far from a reliable science.

But if you check out my last post about the supply of houses vs. demand, it is easy to see how they are arriving at such predictions.

So all and all, I would call this good news. At the very least, it shows optimism…and that to me is the leading indicator of a healthy real estate market.

If you are interested in buying in this market at this time…please feel free to get hold of me.
Or you can search for a house on my website. Medford Oregon Homes

Multiple Offers? Consistently!

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So if you are out in the local real estate market in Jackson County right now…and say shopping for a house under $200,000. You may have notice something.

There are multiple offers on almost every house.

Why is this?

Well, it comes down to that basic economic principle of Supply and Demand.

Currently in Jackson County, there are 376 houses for sale under $200k. That is about one third of all of the homes currently available for sale. In an area of a hundred thousand people, 376 homes is a very small number.
So that is the supply….pretty darn low.

But you may wonder…in this economic environment, what is the demand for people purchasing homes? Well, in that same price range, the number of homes under contract currently is 371. Or in other words, for every house currently for sale, there is one house under contract. In addition, in the last month, 153 homes sold.
So demand is high.
If no other homes came on the market in that range…in 2 months or less the supply would be exhausted.

What is normal in a healthy real estate market for the ratio of supply vs demand?
Many experts say a 6 month supply.

And that is why there are so many multiple offers.

Foreclosures Rising

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This last week there was an interesting article in the Medford Mail Tribune about a Jacksonville man who won a court case on his foreclosure proceeding, and also a weekend  article in the Oregonian about Foreclosure filings in Oregon being up 236%

Together they make an interesting article, but I wished that it was a more NY Times in depth analysis, rather than just the few facts and slight research that was there. They brought up some questions as a combined article…and I haven’t been able to figure out what the behind the scenes real story is.

So what I want to know is did the banks file the foreclosure notices to try to race what they think might be the backlash of negative rulings by  Oregon Judges, or is this a feeling that there won’t be a many negative effects, and they are just clearing out some backlog of foreclosures that could have been filed in February, March and April?

However it goes…it does look like we still have some time left before the foreclosures clear off the market.
Interestingly, foreclosure (REO) listings in our area at the end of May only accounted for less than 5% of the active listings on the market….however they accounted for almost 44% of all sales in the previous 3 months.

So as the new foreclosures hit the market…there will be some opportunities out there for  home buyers to maybe get into a home that only 4 years ago was out of reach. But one has to be quick if one comes on the market you like, cause they don’t last long.

You can search for properties on my website www.realestate-southernoregon.com. However, the feature to search REO properties does not work at this time due to some reporting issues with Southern Oregon MLS, but I will be working on fixing that problem to give people better access to doing their own property research.

In the meantime, if you want REO listings sent to you…contact me directly and I will set something up that will alert you when new REO’s hit the market.

Sales price to original list price at one year high

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One of the statistics I track it what the sales price is in comparison to the original list price. This is different than sales price in comparison to final list price.

What one will note in Rogue Valley Real Estate is that the statistics for sales price to the last listed price has stayed pretty steady at around 96-98% of the sales price. That is more a psychological factor of the local market. It takes the seller coming to the conclusion to drop the listing price first, not them to look at low offers.

An example is that a house is listed for $300,000. They get an offer for $255,000 and they turn it down cause it is just too low (85% of list price). Months pass by, and they drop the house to $280,000 and then more months pass and they drop the price to $260,000. Now they get an offer for $255,000 and take it. The sales price to list price is 98%, but the sales price to original list price is 85%.

So there has been an uptick in this figure from it’s low in January of 86.5%, to May’s figure of 92%. What does this mean to me? Well, one theory I have is that seller’s are becoming more aware of the state of the market and are pricing to the market closer from the start. The days of looking at the comps, and adding 5%, so when the offer came in a little low you still made what the neighbors did, or more, are so 2006. Now, original pricing needs to be at where the comps are…not higher. And

I believe more seller’s and Realtors are getting that.

If you know someone who might need an honest appraisal of value of their property in Ashland or in the Medford area, I can provide an accurate price range, without over-inflating the price to try to make someone happy.

Oh, wait….I bet you all thought my job was to make you happy, right? I guess that is my bad..I think my job is to tell the truth. I leave the happiness up to you. 🙂 When those two coincide, that ‘s the best. That’s when my job is easy.

Buyers are like dating

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DO NOT READ THIS BLOG IF YOU DON”T UNDERSTAND SILLY.

I was having a fun conversation today with a couple of Realtor friends of mine, and I came up with a theory about why I like to work with buyers so much.

Working with a buyer is like dating. And since I have been happily married for over 17 years at this point, I don’t actually get to (have to?) date. And to be honest, I like getting to know people in the way that you do when you spend that kind of time together.

When you get into a realtionship with a buyer, there are distinct stages usually. There is the finding each other stage. Now I know there are a lot of people out there who don’t use me as their Realtor. I can’t quite figure out why not, but houses do get sold without me, so I know it happens. So therefore, we didn’t meet and find out if we were “attracted” to each other.

Next there is the having coffee, getting to know each other stage. I like to do this one at my office, show them pictures of my dog, crack a few jokes, and ask questions about who they are, and what they are looking for in life (which is more helpful than knowing what they are looking for in a house. Most people don’t really know what they are looking for in a house, they just know it when they see it).

Then we decide we’ll go out. Generally involves spending a lot of time driving around together. We look at houses, and wonder what it would be like if we lived here. This is how “I” would remodel this place. If things are going really well, then there is always a chance that we might go out for a drink. Or there may not be those kind of sparks, so it is just a quick kiss on the cheek (not literally), and maybe we will try this again some other time.

Then the buyer finds a house, and that’s when the relationship might get a little rocky. Thing aren’t so perfect anymore because there is “someone else” involved (usually the seller and their realtor). But you have put time into this relationship, and you are going to see it through and be there for them. And you do, you work things out.

And then “BOOM”. they buy the house, fall in love with it and they move in and on with their lives, and suddenly they don’t need you as much anymore. You hope that they liked you well enough that they may introduce you to some of their friends who might want to date you, but the dating ends. You still see each other on occassions, but its just not the same anymore.

And the Realtor moves on…to date again.

The other conversation I had today was with my lovely wife, and we were joking about dating other people. (Seriously, we were joking). And after I had this thought about how buyers are like dating, I can now let my wife know that if she wants me to be faithful to her, she just needs to find me more buyers.

I can just see my ad now….(insert sexy voice over here) looking for a good time? Call Adam…he’ll show you all the real estate in Ashland like you’ve never seen it before.

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Latest Foreclosures In Central Point

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In the last two days, the latest foreclosures to be listed for sale are in Central Point.

*One located on Ester Way and looks like a good bargain. A little over 25oo square feet on 1.78 acres. The house was built in 2001 and currently appears to be owned by Wells Fargo. The price on this house is $299,900.  This is a rural piece on a well, but also on RVS sewer.

*The other new bank owned property in Central Point is on Bush street. It is under 750 square feet, and looks a little rough. But it is priced just below $100k at $99,900.

I have not been out to see these properties yet because they are so new. If you or someone you know want to take a look at them, I would love to go out and be surprised, or horrified with you. When looking at Foreclosed properties, you never know what you are going to find. Every once in awhile they are in good shape, but more often than not, there is a lot of work that needs to be done.

 

 

 

 

 

*Information provided by SOMLS and is deemed to be reliable, but not guaranteed.

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Seller’s Market under $200k—but not over

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I’ve been looking at the added sales volume we have had in the Rogue Valley lately, and hearing stories (and experiencing) multiple offer situations. It has been feeling like a seller’s market in many ways. However, it all seems to be in the lower price range. So I just ran a few numbers.

For the record…the numbers are generate from sales reported to Southern Oregon MLS, and are in town properties for sale in Medford, Talent, Phoenix, Ashland and Jacksonville, with reported sales in the last 3 months.

A quick refresher…I am going to be talking about absorbsion rate. That is the rate of current sales divided into current inventory…or how many months it would take to sell all of the available homes if no other homes were listed.

So the numbers go something like this:

  • Under $200k, there are currently 332 properties available, and an average of 59 sales a month. So there are 5.5 months of supply.
  • Between $200k and $300k there are currently 326 properties available and an average of 32 sales a month. So there are 10 months of supply.
  • Between $300k and $500k there are currently 294 properties available and an average of 20 sales a month. So there are 15 months of supply.
  • Between $500k and $800k there are currently 124 properties available and an average of 3 sales a month. So there are 41 months of supply.
  • Over $800k there are currently 52 properties available and an average of 1 sale a month. So there are 52 months of supply.

A six month supply is considered a balance market….so there is a balanced market at under $200k….but in all other price ranges, it is still a buyer’s market.

How does one account for this? I think the first time home buyers and investors are thinking now is the time to buy. The $8000 tax credit appears to be working. What we are missing is the buyers that are moving up…or the buyers that are moving in from other locations.