Buried Treasure in Madison, Wisconsin Sales Numbers

Pirates buried their treasures and some just took them to the bottom of Davey Jone's Locker with their ships. These gold nuggets get found today by people who go down beneath the surface or otherwise don't wait for the good stuff to rise up and find them. I think there is gold underground in Madison, WI. The kind of gold we can do something with---golden insight. I got a tip off by listening to some open house visitors last Sunday.
The typical buyer is looking at numbers and not the numbers the Realtor Associations are giving out; buyers are flush with data, and we know he who has the information is in charge. Information, relevant information is gold. Gold is king. Here's what I am hearing the informed buyer talking about.

• Price relative to Assessed Value. OK. We don't like that comparison even in a hot market. But at a time when municipal budget shortfalls, foreclosures, distressed sales, high property taxes, are on one's mind, it makes sense to see if what we knew from the old economy is true today with respect to property assessed values. While we might have grinned to bear it, around Madison, Wisconsin, there was said to be a reasonable correlation between assessed value and market value. Homes sold for about 5% to 8% above assessed value. Buyers resisted it and owners accepted it.

Today, the buyer is looking at assessed values and asking prices. If you are above assessed value, Ricky Ricardo would say, "You've got some 'splaining to do, Lucy." Right or wrong. The buyer believes assessed values are wrong and thus, your price can't be right in their minds. Without a compelling reason to jump, buyers are moving on.

• Asking Price to Sales Price. Our MLS reports the last asking price and the sales price. In 2005 that percentage was typically 98% and price reductions were relatively minor. Today, the same comparison looks a little lower, but not disturbingly low, at about 95%. That's not enough to label the market a bust, but if you look at the initial asking price and compare to the final sales price you might be at least a little uncomfortable if not disturbed. 

I looked at 8 fairly popular areas of Madison, DeForest, Middleton, and found the Initial Asking Price to Sales Price is no better than 95% and as low as 80%. I believe if I look at all areas I will find the number to settle in around 88 to 90%.

• The average Cumulative Time on the Market is pushing triple digits in Madison, Wisconsin. We don't talk a lot about cumulative time. We report the last marketing effort and that number will always show a relatively short time. In the hay-day that was fine because the original effort was typically enough to get the job done. A buyer knowing houses are staying on the market and going through more than one broker, may hold off expecting the new listing will become interesting in about 6 to 7 months.

This is not remarkable, but it is fascinating to see in black ink on white paper: When the price is adjusted to where a buyer is willing to make an offer, the time to getting that offer is quick. 19 to 45 days is about all. In a fast paced market, that's what we saw. Price was right from the get go because buyers were willing to jump, and homes had offers in less than 60 days. Now, homes are on the market for hundreds of days but when the price is at the "right price" the buyer's move.

Initial asking prices are determined by many opinions and influence: Broker, Seller, Neighbor, Friend, Hope, Faith, Obama, Doyle...If it weren't for Hope and Faith, I think we would see homes come on the market at 7% less than they are and we would see homes selling in less than 60 days.

Here's the Gold in the buried treasure: Appraisers will be using the sales from 2010 to value homes in 2011. Those prices will be used to decide to sell or stay, offer or walk away. Possibly, as homes come on the market from here out we will have homes priced in line with the true new economy, not the false stimulated economy of first quarter 2010.