## Statistic Geeking – How Low is Too Low

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.

## Resolved to Living More Sustainably?

While we are on the subject of resolutions, if you are resolved (see what I did there?) to make your home a more green and sustainable one, there’s no better time to incorporate energy-saving measures than during the cold months. Here are five simple things you can do to make your house more efficient…

#1 Install a Programmable Thermostat
The advice is usually to turn down the temperature during the winter, but wouldn’t it be nice to wake up to a warm house?

Programmable thermostats let you pre-set temperatures and schedule when the furnace goes on and off. If you use them correctly you could see up to \$180 in savings each year.  More sophisticated devices like the Nest learn your daily routine an automatically adjust temperatures based on your habits. We got a NEST at our house a couple of years ago. I like it, even though it turns the heat on about 30 minutes too early in the morning for me. It wants the house to be of a comfortable temperature for when I get out of bed, but makes the room too warm to sleep in.  Maybe some day I’ll figure out how to fix that.

#2 Install Ceiling Fans
Fans move cool and hot air around your living space, allowing you to turn the temperature down in winter and raise it during summer. During the wintertime, you can reverse the fan’s direction to clockwise to keep the warm air moving down. Plus you can hang your clothes on them for a winter air dry. (Okay…that was a joke)

#3 Eliminate Air Leaks
Use a door draft stopper and caulk and weatherstrip doors and windows to cut down on the cold air coming in.  I actually have the worst door ever for this. I’ve got to get someone out to fix it. We took the weatherstripping off when we had our house painted. However, the weatherstrip was installed wrong because the door jam need to be completely re-done. I just talked to a contractor today get him on the schedule to come fix that.

#4 Use Power Strips
Did you know that many of your appliances use electricity whether they are on or not?Standby power is electricity that’s being used by things like TVs, computers, appliances, and phone chargers, even when the devices are in stand-by mode or even off.

Plug electronics, chargers, and appliances into power strips and switch them off when you’re not using the devices. You could save up to \$200 per year! Or you can buy outlets with a remote control that allows you to turn the whole outlet off.

#5 Change Your HVAC Filter
If you change your filters monthly, you may lower your energy bills by 5 to 15 percent. Plus stop that annoying wheezing sound they make when they get dirty.

Simply put, dirty, clogged filters make the HVAC system work harder.
The savings can be substantial if you keep your filters clean as the average household spends approximately \$2,200 on heating and cooling costs every year. Getting the HVAC system regular yearly maintenance is also beneficial.

## Sales to List Price in Southern Oregon

Different areas in the country have different ways of negotiating sales prices.

For example, in the Bay Area recently, the listing prices have been artificially low to encourage bidding wars. So List to Sales price can be way over 100%

I have heard of other areas that list the houses high, knowing it isn’t uncommon to take 75% of the list price.

So it is important to know the area and the norms when working on negotiating.  So your expectations are set appropriately.

Our market typically sees all home sales occurring between 95-100% of asking price.

The breakdown for 2017 for houses in Jackson County between \$200-400,000 is this:

0-30 days         99.36%        1450 houses sold
31-60 days       98.06%         337  houses sold
61-90 days       97.78%         180  houses sold
91-120 days     97.74%         122  houses sold
120+ days        97.39%          169  houses sold

Note that in that price range, almost 65% of the houses sold in the first 30 days.  So in a competitive price point, one needs to be ready to make an offer quickly. Which might get you thinking about what it looks like on the upper end of the market.  Interestingly enough there is statistically more negotiation rooms in the upper price ranges.  This is how it breaks down for houses priced over \$800,000

0-30 days         98.16%         31 houses sold
31-60 days       97.97%          5  houses sold
61-90 days       98.58%          5  houses sold
91-120 days     92.09%          7  houses sold
120+ days
94.00%         24  houses sold

So think about that.

A house priced at \$300,000 that has been on the market for 100 days statistically will sell at \$293,000 or \$7,000 less than asking price.

A house prices at \$1,000,000 that has been on the market for 100 days statistically will sell at \$921,000 or \$79,000 less than asking price.

And just because I recently ran the numbers, one more set of stats.

Ashland between \$300-500,000 sales price.  Or the “affordable” Ashland homes.

0-30 days          99.02%       62 houses sold
31-60 days        98.39%       25 houses sold
61-90 days        98.49%      16 houses sold
91-120 days      99.43%      12 houses sold
120+ days         99.34%       20 houses sold

## State of the Ashland Market

After a number of years of downturn, it is refreshing to see a rebound in the real estate market in Ashland and Jackson County. The hard economic times that we all weathered through that started with the crash in the real estate market that was caused in large part by the lending practices and gambles made by investment firms on Wall Street seem to have run their course…this time.

We all hopefully learned from this cautionary tale, although when greed abounds I’m sure we are destined to make the same mistake again. But as individuals, we can all make decisions that are based on our personal needs and goals and stay within the bounds of safe real estate purchasing.

I anticipate based on my own research, and that of the head economists from both the Realtor and Home Building associations, that we have started a recovery that is expected to last many years. While I am personally hoping that the frenzy doesn’t lead again to another bubble and responsible purchasing and lending are the rule, we all need to be cautious and not overextend with the same misconception that real estate prices “NEVER” go down.

So where does that leave us today? The market here has definitely picked up steam and sales have been very strong. I said for years to people who asked me if we had hit the bottom of the market yet that the only way we would know would be 6 months to a year after it happened. And according to the numbers, I would say the bottom occurred back in the summer of 2012, although it could be argued easily that it was the summer of 2011.

Now that we have a full year of a strengthening market under are belts, it is a good time to look at what the numbers are.

In the summer of 2012, 49% of houses sold in Jackson County were distress sales, meaning either a foreclosure or a short sale.  In 2013 that number dropped to only 19%. While still significant, it is a huge one year improvement.

In the summer of 2011, the median sales price for a home in Ashland was \$275,000. In 2012 the median sales price was \$292,000. In 2013 that price jumped to \$322,000. That is a 15% increase over 2 years. While I would be hesitant to call it appreciation, it does show the strengthening of the market due in large part to the reduction of distressed sales whose competition drag the market price down of all homes.

In 2011 there were 1650 houses for sale in Jackson County, and 300 houses for sale in Ashland. 2012 saw those numbers drop to 1210 and 238 respectively. Those numbers in 2013 held fairly stable over the year at 1181 and 230. This shows what looks like some stability in the supply side of the market.

The number of sales in May-July of 2012 in Ashland was 83, whereas the same period in 2011 was 62. That number increased to 100 sales in 2013. That is a 40% increase in the volume of sales in a 2 year period.

Now the final number I will throw at you is the absorption rate, which is just a fancy way to say supply vs. demand. In the 3 month period stated above, an average of 33 houses a month sold. There are 230 houses on the market. If no new houses came on the market, and houses continued to sell at the same rate…there would be no available inventory left in 6 months. Common wisdom states that a 6 month supply of housing is a stable market. Less than 6 months is a sellers market, more than 6 months is a buyers market.

So the conclusion is that we are looking pretty good at the current time in the housing market. There are buyers out there looking, and sellers are feeling that the market is healthy enough to sell. Those looking to move up or downsize feel the ability to do so. But if there is one thing the last 10 years has taught me is that anything can happen. All we know for sure is what is going on today, and we must all make out best decisions based on that point in time reference.

## Where are the buyers searching

Common sense tells us that the lower the price, the more people who are in the market looking to buy.

Some statistics that I just got demonstrate what price ranges are being searched by consumers. These are numbers provided by the major players, Zillow, Trulia, Realtor.com, etc.

Last month, there were 28,171 views of 3 bedroom properties listed between \$100-200k. There were 23,551 views of 3 bedroom properties between \$200-300k.

And then the drop-off begins. Between \$300-400k the number of 3 bedroom property views dropped to 11,132.

Just an interesting thing to keep in mind when looking at how much competition there is in the market with you. As a buyer, if you can raise your price range, you become a bigger fish in a smaller pond. And as a seller, if you can lower your price, you are in a pond with a whole bunch more fishes.

## Eagle Point Inventory

I know I usually don’t report on Eagle Point homes for sale. But I am looking at property out there for a client of mine, and finding some interesting statistics. There are currently 4 houses for sale in Eagle Point for less than \$200,000. There are 16 pending sales, and so far this year an average of 10 sales are happening a month. So if you have a house in that price range that isn’t selling…there must be something really wrong with it. And if you are looking to buy a house in that price range, better jump quick and be prepared for being in a multiple offer situation.

## Inventory Is Low

Well, if you were looking to time the bottom of the market to buy a home, I think we found it about 6 months ago. All indications point to increasing prices. The most drastic one is the lack of inventory right now. There is a 3.5 month supply of houses to buyers right now.

2200 Houses for Sale 2010
1600 Houses for Sale 2011
1200 Houses for Sale 2012
What this means is if you are looking for a house right now, there is not a lot to choose from, but prices are still down considerably from 5 years ago.

And if you are looking to sell, now might be a good time to put your house on the market while competition is low.

## Multiple Offers? Consistently!

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.

## What everyone seems afraid to ask or….

What everyone’s afraid to ask….OR….. The “How’s the Market” Blog

Another year has passed in the great recession that we all are going through. It has been a tough time financially for many of us.
Being a real estate professional, I still get asked how the real estate market is, although admittedly not as often as it used to be. I believe many people don’t want to hear the answer.
So I will do my best without rambling to let you know what I feel is the state of the local real estate market.

This Is The New Normal

I don’t believe we are going to be seeing any big shifts in the real estate market in the coming year(s). What you see out there right now is pretty much how I think things will stay.
My statistics show that:
• Roughly the same number of houses sold last year as the prior year.
• Number of houses on the market for sale (inventory) is down 24% from last year.
• Median prices are staying somewhat level…slightly up in some areas, and slightly down in others
• Average days on market for listings is stable at about 90 days
• Distress sales (Foreclosures and Short Sales) make up close to 50% of the solds…and 25% of the active listings
What this boils down to is there are a lot of great deals out there…especially in the distressed sale market. This can be good for those who are looking to buy.
However, those looking to sell are going to continue needing to compete with the distressed properties.
For more information on the Ashland Real Estate Market, visit my website. www.AgentInAKilt.com
Search for houses currently for sale at www.RealEstate-SouthernOregon.com

## Ashland Summer Not So Hot

This has really been another mild Summer in the Rogue Valley. For an area that has normally seen a handful of 100+ degree days by now, they are nowhere to be seen.

Image by Cle0patra via Creative Commons

This is good news to many who do not like that hot weather…plus good news to keep the forest fires down, and the rivers and lakes full.

Unfortunately, Ashland Real Estate is not as hot as it could be either. Since Summer Solstice, there have been 36 sales in Ashland. There are currently 30 pending sales to go along with that.

But there is a supply of another 195 houses still on the market. With an average of about 19 houses per month selling, that has Ashland at a 10 month supply.

So to relate that back to the weather analogy.

If the normal real estate temperature at this time of the year is pushing 100 degrees, then this year we probably are looking at temps around 85 degrees. Still fairly pleasant, but definitely not hot.

Okay, enough silly weather analogies. I’m going to go out and enjoy the pleasant 85 while we’ve got it…cause you all know that fall is right around that next corner.

Cheers.

P.S. Remember…if you want to look at what houses are currently on the market you have find Ashland Real Estate Listings Here.