I just finished reviewing the Northeast Florida Multiple Listing Service/Northeast Florida Association of Realtors 4th Quarter 2007 Market Watch Report
The Report's home sales data by zip code for Duval County follows. I apologize for the appearance - those of you close to my age will probably need your reading glasses. (The look really bothers the perfectionist in me!)
Atlantic Beach average sale price increased 19% in the 4th quarter over the 3rd quarter! W00t! Wait...proceed with caution!
Before we get excited about a 19% increase, only 104 "average days on market" and a 97.4% sale/list price ratio, let's look at all the facts.
"Average sale price increase" is impacted by the location of sold homes. Home prices in Atlantic Beach vary greatly by location. If all 17 sales were in a neighborhood where the price range is $225,000 to $325,000, would a 19% increase also apply to oceanfront homes? If 16 homes sold in the $150,000-$200,000 range, and one was an oceanfront home that sold for $2,000,000, is 19% still a reliable increase in average sale price?
Another consideration is that "average days on market" and "% of sold/list price" only looks at one listing at one point in time: the active listing when the property sold.
Here's why this is important.
The property may (likely)have been listed more than once, under different listing numbers. This happens if the listing expires and a new REALTOR® is hired. This can also happen when a listing expires and the REALTOR® decides to relist under a new number so the listing seems newer on the MLS. "Average days on market" only counts the one listing in effect at the time the property was sold and closed.
Similarly, the sale/list price ratio only looks at the list price on the day the property went under contract. The list price may have been reduced significantly from the original asking price. If the original list price was $500,000 and was reduced over time to a more reasonable (for the market) $425,000, then a $399,000 sale price would be a 94% "sale/list price at the time it sold." The ratio when looking at "sale/original list price is only an 80%.
So..."days on market" is a MINIMUM days on market, and the "% of sale/list price" is dressed up in its Sunday best!
Fortunately, our MLS has the data needed to draw more meaningful conclusions, such as which 17 homes sold, whether a property was listed under more than one listing number, and the list price history. It's labor intensive to research and most people don't seem to care, but...this information is critical when helping a buyer determine an offer price or a seller determine a realistic listing price!