Thinking of making an offer on that Phoenix house?

My friend, and fellow Realty Executives agent, Artur Ciesielski was noting the other day that he is seeing sales prices as much as 40% over their list price for homes in parts of the greater Phoenix area.  This got me thinking once more about the frenzy of 2005, where it seemed as though every home that sold, sold for over list price.  The big question back then wasn’t would it sell for the asking price, but how much over the asking price a home would sell for.

Naturally, I’m extremely curious how selling prices are relative to asking prices right now, in 2009, so I pulled some numbers.  Wanting to look at the most active part of the real estate market, I decided to pull every sale of a single family home listed below $125,000 that has sold since 4/1/2009.  That resulted in 5699 homes sales to consider.

So of those 5699, how many do you suppose sold for above asking price?  I had my own guess, but what I found still surprised me.  To get the most accurate picture possible, I pulled all of the data out of MLS and plopped it into a spreadsheet where I could do some crunching on it.  Now, you might not believe this, but surprisingly, there are a number of data inaccuracies in the data that is within MLS.  It’s rather easy, for example, to enter $599,000 when an agent intends to enter $59,900, as there aren’t any data entry police, watch-dogging the numbers.  Since it as important to me to get the data at least somewhat accurate, I looked for the big outliers, and made corrections/adjustments to help clean up the most obvious of these data entry mistakes.

A couple of hours of scrubbing, and I think what I have is reasonably accurate.  At least, without doing a complete comparison of MLS to tax record recordings.

What was your guess again for how many of the 5699 homes sold above asking price?  2118 would have been a very good guess.  Over 1 in 3 homes are currently selling for more than their asking price right now.  Or rather, they sold for more than their asking price at the time they went under contract.  Not quite satisfied with that statistic, I looked at how many homes sold for above their original list price.  Here, the number is less staggering, but still impressive, with 1288 homes selling for more than their original asking price.  So, price reductions are still happening at the bottom end of the Phoenix real estate market, and these price reductions are resulting in encouraging buyers to make more aggressive offers.

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Looking at the homes that sold above asking price, I wanted to explore further just how much over asking price they sold.  A few of the homes were priced somewhat auction style, with asking prices of $1 or $500.  Including a list price like that into the calculations throws the numbers all out of whack, so these sales had to be ignored, or you get things like a home selling for 635000% of it’s asking price.

What I found, is for the 2118 homes that sold above asking price, on average, they sold for 9% above asking price.  For the 1288 homes that sold above their original asking price, they sold for 11% above their that original asking price.

Throwing out the most extreme examples, a decent number did indeed sell for 20%, 30%, 40%, and even 50% above their list price, just as Artur was finding.  It wasn’t a high percentage of homes, but it certainly was a good number of them.  Overall, however, homes below $125,000 are now selling on average for 98% of their final asking price, but just 81% of their original asking price.

Have a question of your own about the current real estate market in Phoenix?  Feel free to leave that comment below, hit my question form on the side, drop me an email, or give me a call.  I’d love to explore what’s on your mind as well.

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