Should buyers wait for further price drops? Signs of a bottom are near, and it’s all about psychology. Read on.
(By Raul Elizalde, 4/07)
In my November 2006 newsletter (Listing Price vs. Selling Price, November 2006 ) I looked at a common measure of the market: the ratio of Selling Price to Listing Price (SP/LP), which is reported to be around 90% for single family homes in Sarasota. The November article explained that the number is somewhat misleading, because the ratio is defined on the basis of the last listing price before a property goes under contract. Any previous price reductions are ignored.
A better measure is the ratio of Selling Price to Original Listing Price (SP/OLP). Using this ratio reveals a clearer picture of the market. As prices weaken, reductions become more common and the ratio SP/OLP decreases. Also, even without intervening price reductions, sellers become more willing to take low offers and settle for less.
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