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What do homes typically sell for?



You see the homes come on the market, you see what they are listed for, then you see the sold sign go up but you not sure what it sold for. Unless you talk to the sellers, have a realtor look for you, or view the sold's in my weekly email. There is a general rule of thumb which is the ratio of the list price to the sale price. But the economist side of me uses this statistic to offer insight into current market conditions and consumers' motivation. A lower ratio, means people are willing to negotiate more. A ratio closer to 100 means there is not much room for negotiation. This will depend from deal to deal but the ratio typically will give an idea of a general overview of the market. This statistic helps give insight into consumer confidence and can indicate a changing market. In 2019 the average list to sale ratio in Interior BC was 97.31% and which means if the home was listed at $600,000 on average it would sell for $584,820. With a lot happening in the world, nothing seems to surprise us these days. How has the ratio faired in 2020? Currently, for the first 6 months of 2020, the average list to sale ratio is 97.27%. It is incredible to think the list to sale ratio is still in line with 2019 numbers, with everything going on. There are a few reasons this could be, looking at lower inventory we are experiencing, prices are remaining static, and creating more of a seller's market. As when inventory increases, if demand does not follow that is when you will see prices decline. Right now demand seems to be following inventory levels. Back in April When everyone was quarantined, stock markets were crashing and people were getting laid off, no one really knew the full extent of the virus. The list to sale ratio took a dip, the ratio was 96.7%, that might not seem like a big decline but does show how consumer confidence in the market decreased with all the unknowns that was going on at that time, this was down from 97.5% in March and 97.6% in February. In July where we stand at 97.5. This ratio might be impacted by lower inventory levels however does show consumer confidence in the marketplace. In 2018 the average list to sale ratio was 97.76% and 98.11% in 2017. Take these ratios with a grain of salt, it doesn't take into account homes taken off the market and relisted at a lower price, however, does give insight. Let me know if there is anything I can do for you. Stay Safe! -Mark

 

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