A few weeks ago reader Barrister commented that not only is inventory low, but much of what is listed are actually just the dregs. Those houses that are overpriced for the market and merely represent wishful thinking or fishing expeditions by the sellers with no real motivation to sell. Of course those properties exist in both slow and active markets, but assuming that the number of sellers that are either deluded or out fishing remains more or less constant, one might conclude that with such low inventory the dregs represent a greater percentage of the active listings than usual. Let’s take a look.
What constitutes a stale listing? I’d say in this market anything that’s been on the market for over 3 weeks. Any commodity house that’s priced right should sell more quickly than that so those that linger are overpriced and at best will have to drop their prices or wait for the market to catch up.
Out of over 1000 properties on the market, the majority are actually just the dregs sitting on the market for sometimes years in the vain hope they will be sold at unrealistic prices. Of course luxury properties would be expected to sit longer so not all of the dregs are necessarily overpriced. On the other hand you have to keep in mind that a good chunk of the 364 properties that have been on the market for less than 3 weeks are overpriced and just haven’t sat long enough to qualify as dregs. The common trick of relisting stale properties means there are probably fewer than 300 serious sellers of residential property right now.
Narrowing in further to condos vs detached, we can see that a greater proportion of single family homes fail to sell promptly, which makes some sense as they are harder to price correctly and there are more luxury houses that sit on the market.
Any way you slice it, once you take a look at what is realistically for sale out there, you can see why people are having a hard time. We need more inventory to come on to the market and that has to come either from new builds or people leaving the region. Given the latest population numbers from the census it doesn’t seem like we will get much help from the latter.
HHV Update: How did I do this analysis? Well as you may have suspected I have managed to become licensed as a
used house salesman REALTOR®. What does that mean for House Hunt Victoria? Will it devolve into just another boring sales blog for houses? Nope. I have a full time job that I’m quite enjoying and am not intending to leave for the time being. I also have zero interest in carting buyers around and twiddling my thumbs at open houses. So why the heck get licensed? Here’s why:
- More data. While I appreciate how open the VREB is with their public data, there is a limit to what can be done with what is published.
- Opportunity for more automation. I have some very crude tools for automated market analysis over in the market summary, but I think there is much more potential in this area to increase the information available to the general public. Being licensed allows me access to the data feeds that can be consumed by web tools and turned into interesting visualizations. My goal has always been to provide evidence based market analysis and the more transparent the data, the less people will be misled by the industry spin. If you think the information I’m presenting is one sided or biased in some direction, please let me know and I’ll correct it.
- Explore alternative business models. Why can’t you easily hire a real estate agent just to write up an offer? Why is much of the business stuck in 2003 as far as information tools go? How can we correct the information asymmetry that exists in the market and bring more power to the people (MREGA?) My goal is to find some way to tackle some of these without introducing conflicts of interest. The market already has more than enough of those.
What do you think? Big sell out? What kind of tools or information is missing out there?