July 2010
Spec Home vs. Resale Prices
This article offers an overview of the spec home list pricing trend and the resale sales price trend over the last three
years. Contrasting these two trends provides valuable insight into pricing
issues.
From mid 2005 through
mid 2007 the median resale sales price was basically flat. The new spec home
list price began a 16 month fall which then flatted out for about 8 months.
Since November it has again begun a decline. This presentation offers these
valuable insights:
1. Spec pricing began declining about nine months before
resale pricing.
2.
The rate of resale median sale price decline accelerated as the proportion of
REO sales increased.
Resale Home Sales Price vs. Historical Norms
Below is the updated version of the Median Resale Price
Projection which we created and first published in February 2007. As you can see, there has already
been a major over-correction in the median sales price.
The source of the data for our spec pricing study is the
Ultimate New Homes Database. This is not an all inclusive list of specs,
but is fairly representative of the whole. Some, but not all, of the spec pricing data includes some of
the incentives being offered by the builders. The source of the resale pricing data is ARMLS.
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