Price swings puzzle Kate
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Kate in the Valley is back, watching price reductions like a hawk and trying to make sense of a market that defies easy explanation:
Last week I was talking about how scary the drop in the market was because it seemed to be happening so fast. This week I look around and think it’s more like two steps forward, one step back. For example, there’s a street in the hills of Sherman Oaks called Contour Drive that has at least three homes for sale. The first two have dropped significantly since they were originally listed:
13545 Contour Dr. (MLS # FR2055214 & F1732673) $478/ sq. ft.
Price Reduced: 07/23/07 -- $1.599M to $1.495M
Price Reduced: 09/03/07 -- $1.495M to $1.349M (down 15.63%)
13553 Contour Dr. (MLS # F1722523) $389/sq. ft.
Price Reduced: 07/12/07 -- $1.025M to $950k
Price Reduced: 09/05/07 -- $950k to $895k (down 12.68%)
But the third -- a flip -- came on the market last week at $1.169M:
13566 Contour Dr. (MLS # F1732137) $779/sq. ft.
I’ve seen all three houses. None of them are fixers and none of them are state of the art. What could be the justification for such dramatic price differences? I cannot guess. And it’s not just new listings. I’ve seen more than a few price increases recently. For example, in Encino, a little house was on the market for 172 days. It went through a lot of price reductions and then they inexplicably raised the price:
15560 Otsego Street (MLS # F1703604)
Price Reduced: 04/04/07 -- $875k to $859k
Price Reduced: 04/13/07 -- $859k to $829k
Price Reduced: 04/22/07 -- $829k to $779k
Price Reduced: 06/07/07 -- $779k to $739k
Price Increased: 08/30/07 -- $739k to $805k
The same thing happened in North Hollywood:
5101 Strohm Avenue (MLS # : B2100128)
Price Reduced: 04/16/07 -- $1,000,000 to $850,000
Price Reduced: 07/18/07 -- $850,000 to $835,000
Price Reduced: 08/07/07 -- $835,000 to $749,000
Price Increased: 08/09/07 -- $749,000 to $950,000
Of course, everybody is saying, ‘Prices are sticky. It’s going to take years for this correction.’ But I guess I imagined a slow, steady decline, not this spasmodic limping along.
Thanks, Kate.
Comments? Insights? Any explanations on why prices rise after being reduced?