As I was going over the numbers for Sacramento’s Duplex market the other day, I noticed something that I’ve found true in many of the updates I’ve written for many of the different mini-markets around Sacramento. It’s a statistical fact that seems a bit odd when you first notice it. The fact is, despite rising inventory, longer days on market, rising expired listings — all signs of moving toward or in fact being well within a buyer’s market — the ratio of sale price to list price hasn’t shown any sort of catastrophic drop.

This difference in the numbers is sometimes called the “swing”. In a hot seller’s market, you see sale prices over list price, as buyers compete on multiple homes. Sale prices might work out on average to be 102% or more of list price.

Yet in the current market, numbers don’t drop to something like 90% or less as you might expect, even though other statistics like days on market and expireds change in a big way. Instead, you might see numbers like 98.5% of list or 99.2% of list — still within a point or two of selling price, and not the huge “10% off” that you might hope for as a buyer.

I think I understand this seemingly “unusual result”. At least, I have a theory that fits in pretty well with my strong belief that there are bargains and turkeys in any market. The reason the sale price to list price ratio doesn’t change dramatically is that there’s still strong competition for certain homes in this market — if the homes are perceived as a bargain by the buyer. I’ve still had homes in this market sold “out from under” buyers I was working with who were interested in them after only being listed a short time. Presumably others who add to the longer days on market sell fairly quickly after the price reduction that makes them seem a bargain, and then go quickly at close to list.

Remember, this thing we call “the real estate market” and talk about is nothing less than a statistical abstraction based on averages of many homes. The term buyer’s market and seller’s market refer simply to the place you have to be at on the price side to succeed or fail.

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