Quote:
Originally Posted by Mr. Zero
Is the direction that ratio is trending used as an indicator for a strengthening or weakening market?
I'm also curious to see what that ratio looks like in this neck of the woods: 90266
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I guess you could say that. Comps by definition trail the market by a few months because it takes a couple of months for them to go from listings to completed sales. So, the value of the property when it went into contract could be different from it's value on the day the sale closes. When you're pricing a home you're essentially using old data but at the same time it's the newest data available. So, if the market is declining one could assume if the data is correctly interpreted and the house is priced based on that data that it would automatically be over priced. Conversely, in an inclining market if you price based solely on comps then you're listing price is too low.
This being said, any real estate agent worth their license shouldn't be pricing based entirely on comps. They should be using their knowledge of the market as well. This is where it pays to listen to your agent and not just go with what you think as a homeowner.
Again, the human factor weighs heavily in the arena of pricing. So, it's hard to make generalities like this. I like to think of price as a number someone made up. It's not necessarily based in reality. The only number I consider important at the end of the day is the value of the home.