Ithacating in Cornell Heights

A few weeks ago in the Voice, an article ran saying that bidding wars were breaking out in Fall Creek. Homes in the neighborhood are being fought over by multiple buyers, and driving up the sales prices (and assessments for all the other properties).

So, being of an analytical mind, I wanted to see if there was any way to prove that. And that is the topic of today’s post.

So the hypothesis is, if there are bidding wars going on, we should be seeing relatively low reductions from listing to sales price, or even sale prices above the listing price. According to anecdotal evidence from real estate website Zillow, 90-95% of list value is common, assuming that the home was priced realistically for its market.

Using the bounds of Fall Creek as defined in the article, listing and sales data were pulled from houses sold within the neighborhood from 2013 to present. Zillow and Trulia (mostly Zillow) were used to find old listing prices, and the sales price were cross-checked with the county records website when possible. The initial price was used, meaning that if the owners reduced the price before a house sold, it “didn’t count”.

One of the problems is, not all houses go through real estate agents, and not all homes are widely advertised when they’re put on the market. There’s a lot more sale information out there than there is listing information. Nevertheless, sales and listing prices were found for 45 homes in the Fall Creek area. Not the most robust sample size, but the homes are a nice distribution of sub-neighborhoods and sales values. The mean listing price here is $238,460, and the median $226,900. The average home value in Ithaca was about $220,500 over that time period (and $229,100 now), so our initial values are both pretty close to the city average.

Now let’s look at the sale prices. Many prices went down, and judging from the increase in a few of the pricier bins, some values went up as well. The mean sales price is $234,444, and the median sales price is $225,000. The lump sum math says that the average decrease from listing to sales price was 1.68%. So if we go by the Zillow guideline of where sales price is 90-96% of listing price, and here the sales price is 98.32% of the list price, then there’s at least evidence that Fall Creek is doing quite well as a real estate market.

However, looking at the aggregate values don’t tell the whole story. Breaking down and sorting the percentage change between listing price and sales price, 17 of the listings saw an increase from the asking price in the listing, to the sales price. And then there’s at least 4 property owners who either had really unrealistic expectations, or were hosed. One of those houses was on the market for 22 months, while most of the other listings were on the market for 2-4 months (and by on the market, I’m counting the pending sale/listing removed period).

If one goes looking for trends with time, they won’t find anything here. With an R-squared of 0.0447 (and R of 0.2114), the trend line is crap and there’s no strong correlation with prices as a function of time. There didn’t appear to be a strong trend geographically either, although I did not set up the data for geographic parameters (but if someone really pushes for it, it’ll be produced for verification’s sake).

In conclusion, there might be some bidding wars going on. There are definitely homes selling over asking price, and the housing market in Fall Creek is certainly healthy. But there are still a number of homes selling in the more typical -5% to -10% range, either because sellers are asking too much, or because buyers haven’t been biting (given the other evidence, I’m going with sellers asking too much).

There have been very rapid appreciations in home values in the past 15 years, which have caused strains for residents with modest or fixed incomes. But for now, home buyers appear more than happy to offer a way out. For better or worse.