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Jonathan Miller Unleashes The Red Arrow Upon Listing Discounts

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Jonathan Miller, CEO of real estate appraisal and consulting firm Miller Samuel and maker of charts at RBI/MRIS, is also a Curbed contributor. Here is his Three Cents Worth column.
[Click to expand.]

Since there is more confusion now than ever about the state of the US housing market I thought I'd avoid talking about the now, but rather look at how we got here. Context. My favorite word of 2011.

Of course, I got carried away, but this started out as a simple multi-year chart comparing the listing discount to the year over year percent change in monthly average sales price for the Washington DC metro area housing market. The blue line represents the listing discount—which is the percentage difference between the original list price and the final sales price. The green line represents the change in monthly sales price year over year.

I would be remiss if I didn't include annotations and the infamous (and feared) Curbed Red Arrows to point out milestones along the way. So brew some coffee, sit down and take a look, because there is a lot here. Click here to see a full screen of the above chart.

The idea of tracking changes in housing prices and listing discount appealed to me because it shows the rate of growth and decline against the negotiability between buyer and seller. In this chart using data from www.RBIntel.com, these two metrics are basically polar opposites (like those Kirigami snowflakes you cut out in grade school) - the pattern makes sense: housing prices rise rapidly when supply is limited and the seller has the upper hand, therefore less willing to negotiate.

It's quite amazing that during the most rapid period of appreciation (the spring of 2004 and 2005), properties were selling above the price they originally came on the market for. That was a unique period in global economic history [fueled by readily available credit and virtually no underwriting standards for mortgages]. That seems to be a distant memory as sanity has slowly returned. Year to date, pricing in 2011 is showing general stability as the market broke free of the tax credit drag at the end of 2010 and the listing discount is returning to more normal levels.

· Average Sales Price Versus Listing Discount 2003-2011 [MillerSamuel]
· Washington's Pending Sales Deserve The Nickname Steady Eddie [CDC]