I pulled up a listing history in RMLS and found that the listing was first listed at $215,000 in November of 2009 and is now priced at $199,500. The price has crossed the $200,000 threshold so should see a new pool of buyers even though the listing has been on the market for more than a year.
The price has come down 7.2%. Here’s the problem: if it was $5000 overpriced then, it is even more overpriced in today’s market. The Case Shiller Index for Portland real estate has dropped 8.0% in that time so if you do the math, the current listing price, just chasing the market down should be $197,800 ($215k – 8%). Subtract the $5000 that it is overpriced by and the selling price is $192,800. You have to play along and assume that the house is representative of the market according to Case Shiller and the $5000 overpricing is accurate.
What it means is that the house would have sold for $210,000 when it was listed would sell for $192,800 today. By chasing the market down the seller has lost $17,200 and realistically more than that. During the listing period the price reductions have resulted in a price increase in today’s market.
An analogy: if you were at the back door of the bus when it started to pull way and you need to get in the front door to get on, you’re now at the back bumper a year later.