How Relistings Affect the Market

February 27, 2011

by Scott Sambucci


Check out our weekly number of active listings in San Mateo County that are “relists” – homes that exited, then re-entered the market within a three-month window – as of this week:

Percentage of active listings that are "relisted"in San Mateo County

It started back in November when it looked like the market was improving… Inventory steadily declined in November and December, while listings absorbed (a.k.a. “exits” – homes leaving the active market) rose – thus it appeared that the San Mateo market was clearing out in 2010:

Active housing supply: San Mateo County from 11/01/10 to 12/31/10

Weekly Listings Absorbed: San Mateo County from 11/01/10 to 12/31/10

Additionally, the percentage of active listings that took price reductions moved lower during this period. (Fewer price reductions typically means that sellers are seeing more actively at their current price, therefore they don’t feel the need to adjust their ask downwards – another good signal for the market.):

Percentage of active listings with price reductions, 11-01-10 through 12-31-10

But, were the declines in inventory and price reductions a result of increased demand, or something else?

While inventory fell 33% in November and December (from ~2100 homes for sale to ~1400), 12% of the homes now available for sale in San Mateo County are relisted properties. Additionally, relists frequently include a price reduction, so extending the Percent Price Decreased chart above through the current week (orange curve, right axis) and coupling with the active inventory count (black line, left axis) shows that supply is rising, as is the number of those available homes previously available for sale at a higher price:

Active inventory (black curve) & Percentage of the active inventory that is a "re-list"

So with all of the so-called “good news” and positive indicators in Fall, how’s one to decipher what’s really happening out there?  Well, just ask the active sellers that either remained on the market or first entered the market in late 2010.  They showed all the while that San Mateo wasn’t a happy market:

Market Ask Price & the Price of New Listings, 11-01-10 through present

Subsequently, prices are improving even with the increased inventory and price reductions as the quality of homes for sale improves. The Spring season brings more “normal” sellers, as opposed to distressed sellers that can dominate a market in Fall season. There’s never one indicator for the market to know what’s happening out there, and the percentage of relisted properties provides a unique perspective to explain market conditions.

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