Last week I posed the question: Do Distressed Sale Prices Affect Non-Distressed Home Values? I think you’ll find that the answer is: It depends. To demonstrate my point, I decided to use the sales activity in the City of San Mateo for a variety of reasons. Of the six communities I survey each week, San Mateo has; 1) the largest number of homes in each of the MLS statuses, 2) an extremely expansive price range and 3) the largest number of Short Sales and REOs. This week I did a survey of the number of homes in San Mateo that had a contract for sale accepted in the month of June. There were 70 properties with contracts ratified within that time period ranging from the highest list price of $2,549,000 to the lowest of $384,900. I then broke the list down into four approximately equal groups based upon pricing.
The results for the Group 1 consisting of homes 1-18:
List Prices: $2,549,000 – $939,000
Short Sales: 0
REOs: 0
Total Distressed Sales: 0
Percentage of Group 1 Sales that were distressed: 0%
The results for the Group 2 consisting of homes 19-35:
List Prices: $899,000 – $699,500
Short Sales: 0
REOs: 1
Total Distressed Sales: 1
Percentage of Group 2 Sales that were distressed: 6%
The results for the Group 3 consisting of homes 36-53:
List Prices: $699,000 – $577,000
Short Sales: 2
REOs: 1
Total Distressed Sales: 3
Percentage of Group 3 Sales that were distressed: 17%
The results for the Group 4 consisting of homes 54-70:
List Prices: $575,000 – $384,900
Short Sales: 8
REOs: 5
Total Distressed Sales: 13
Percentage of Group 4 Sales that were distressed: 76%
Based upon the data from San Mateo, the higher priced locations had relatively little distressed sale activity. The lower the price ranges, had significantly higher percentages of distressed sales. According to an article in C.A.R.’s June/July 2010 California Real Estate Magazine: “Appraisers are required to provide a total of five market comparable with each report: Three on properties sold within 90 days (all from the public record), one active listing comp, and one pending sale comp (both from MLS). Comparables must be similar (within 30 percent) in size to other homes in the neighborhood and in the same condition.”
If the majority of comparable homes in the neighborhood are distressed sales, an appraiser is limited to what data is available and those sales may have a larger influence on the values of the non-distressed homes. Bank owned properties are generally in less desirable condition than the Short Sale properties. Non-distressed properties tend to be in better condition than properties subject to a Short Sale.
It is also interesting to look at the separate Short Sale and REO surveys provided in the links below. There were 12 Short Sales that closed escrow in June 2010. 11 of them were sold at the list price or higher. The likelihood of being in a competitive bidding situation or having the Short Sale investors sticking closer to their price seems higher.
The REO survey shows 4 REO closed transactions in San Mateo. None of them sold for the asking price or more and, in some cases, the negotiated sales price was substantially lower. However, the only REO property that closed escrow in Redwood Shores sold for $90,000 (10%) over the asking price.
This week’s surveys:
The link to the spreadsheet above is for single family residences only on the date posted and for the communities listed. Any link identified in this blog as a “Spreadsheet” is basically the same but for different time periods.
The link above to the Chart is intended to give a visual historical representation of the same communities comparing the current time period with the same time periods for the previous three years.
The link to the spreadsheet above is one of the newly expanded postings. It is set up similarly to the other basic spreadsheets but with data only applying to those homes listed in MLS as Short Sale. Please note that this spreadsheet now includes Maximum, Median and Minimum pricing for properties in the Active, Pending and Month-to-date listing statuses. In the Sold Status, the number of properties that sold at or above the asking price is noted, as well as the price differentials for the Maximum, Median and Minimum priced homes.
The link to the spreadsheet above is another one of the newly expanded postings. It is set up similarly to the other basic spreadsheets but with data only applying to those homes listed in MLS as a REO (Bank Owned). Please note that this spreadsheet now includes Maximum, Median and Minimum pricing for properties in the Active, Pending and Month-to-date listing statuses. In the Sold Status, the number of properties that sold at or above the asking price is noted, as well as the price differentials for the Maximum, Median and Minimum priced homes.
The three spreadsheets links listed above contain the three-year historical raw data that is used in the July 4, 2010 Chart above.
Happy Fourth of July!
