Estimable Forbes magazine has declared the Phoenix real estate to be one of the 10 most overpriced markets in America, which may come as quite a surprise to the denizens who are sitting on home values close to where they were a half-dozen years ago.
In that metro, homes are listed for 22% more than when they are sold, among the highest spread of all the cities we surveyed. Homeowners there simply can’t afford to drop their prices.
I’ll agree with the last sentence, absolutely. Many homeowners can’t afford to drop their prices. As for the first half, it just doesn’t match what’s in the Arizona Regional MLS. Based on what we see in ARMLS, the average list-to-sales ratio still is holding in the mid- to high-90s.
Forbes used different methodology, so perhaps that’s part of the issue. But it seems there is a larger issue at play here, a fundamental misunderstanding of what list prices truly mean. And that, in short, is nothing whatsoever.
List prices have no meaning whatsoever, unless you’re a seller trying to determine where best to position your own property. It’s only closed sales that matter. For every owner who has priced their home too high, you can find another who has priced their home at current market value or even a bit below.
About the only way I can get the 22 percent figure to reconcile with anything we’re seeing is if it’s reflective of sales price compared to original list price before any reductions. If so, the gist of the article remains misleading as it’s incredibly unlikely an offer made at 78 percent of market value is going to be accepted.
There always will be agents willing to stick a sign in someone’s yard at any price they ask; poor judgment and poor pricing in the past doesn’t have any bearing on where a home will actually sell in the future. That’s based on the market.
Then again, if you’re one of my buyers maybe you ought to hope other buyers are taking the message to heart. It will make it that much easier to get the property you want at a still decent price while they lowball themselves into eternal rent damnation.
[tags]Phoenix real estate[/tags]