Richmond Real Estate Market Report

Blog by Arnold Shuchat | May 6th, 2014

I am not a big fan of using graphic technical analysis for investment purposes.  However, there is a certain psychology that sometimes makes sense of it all.  Say you were almost looking at retirement as a seller, or a frustrated one back in 2011.  If the highest price for similar properties to yours fetched $1,000,000 back then, would you now wait to see if you could surpass that number in 2014?  Chances are that you would not.  You might have been kicking yourself for the last 2.5 years that you didn't grab the $1,000,000 back then.  After watching your property value descend to possibly around $870k you might leap at the chance to get even close to where it was last time.

As prices move up and homeowners get that feeling that it is time to "Jump back in", listings increase and there may be an increased likelihood of seller frustration as the competition from other sellers extends the time on market.  Listing agreements may expire or be terminated due to seller frustration.  Tracking the expired and terminated listing counts month to month and year over year can help give us a sense as to what is really happening in the market and whether pricing a product based upon previous comparables continues to make sense.  What if most of the listing prices are incorrectly derived based upon prior comparables, without looking at the likelihood of a successful listing? 

Below is what I call the Seller's Delusion Index which tracks Expired+Terminated listings as a percentage of units sold for each property type, detached and attached, on a monthly basis.  I have tracked these numbers since February 2011 below.  The lower the number, the better the seller's market. A high number shows sellers spinning their wheels and is an indication that they are reaching for too high a target. The index has ranged from a spectacular .27 at the height of the market to to a high of 6.16 when the market was in the doldrums in late 2012.  Of note below is that while the March numbers were strong for sellers, the April numbers while lower than April 2013, show a sharp increase over March of this year.  This would indicate a time to really consider realistic selling expectations for pricing, going forward.

Seller's Delusion Index to April 2014
How Are We doing?

Ratio of Expireds Detached Properties
& terminateds to
Sales (SDI) 2014 2013 2012 2011
April 1.055      
March 0.66      
Feb 0.544      
Jan-14 0.52 1.01 0.91 0.17
Dec-13 0.71 1.57 0.92 0.25
Nov 2.57 6.16 4.32
Oct 1.07 2.96 1.55
Sept 1.3 2.96 1.5
Aug 1.42 3.34 1.73
July 0.98 2.85 1.94
June 1.16 3.6 1.32
May 1.19 3.22 1.37
April 1.77 2.28 1.13
March 1.21 1.33 0.829
 Feb 1.81 1.34 0.338

  Attached  Properties
Ratio of Expireds
& terminateds to
Sales (SDI) 2014 2013 2012 2011
April 0.97
March 0.526
Feb 0.70 0.77 0.47 0.25
Jan-14 0.72 1.16 1.03 0.36
Dec-13 2.23 4.19 3.59
Nov 0.99 1.61 1.59
Oct 0.694 1.88 1.3
Sept 1.29 1.43 1.69
Aug 1.21 2 1.29
July   0.92 1.65 0.92
June   0.84 1.38 1.06
May   0.91 1.36 0.567
April   0.92 1.099 0.522
Mar-13   0.886 0.667 0.276