Keston recently commented here as follows:


I can follow Keston's logic --- if prices went up 10% per year (or more) as the housing market accelerated, why shouldn't prices go down 10% per year (or more) as the housing market decelerates?!!  Here are my thoughts:

First, I definitely agree with Keston that it is very logical for a buyer to want 10% off a fair asking price. 

Furthermore, I imagine those logical buyers are quite perplexed (and perhaps frustrated) that prices haven't fallen by 10% a year as the market has declined.  The law of supply and demand definitely suggests that prices should have adjusted as demand so drastically declined over the past three years.

But, given that prices haven't fallen in this area, let's examine what is likely happening as those logical buyers try to buy in our local market with the perspective that they ought to be able to negotiate 10% off an asking price.

• The the past three months, 224 residential properties have sold in Harrisonburg and Rockingham County. 
• These 224 properties sold, on average, for 96.37% of their asking price.  Thus, on average, buyers only negotiated 3.63% off the asking price. 
  
• Of the 224 properties, only 19 properties (8.5%) sold at a price of at least 10% below their asking price.  
• Of the 224 properties, only 5 properties (2.2%) sold at a price of at least 15% below their asking price.
  

So, what's a logical buyer to do?  There is nothing wrong with wanting to negotiate 10% off an asking price, or with making offers given such logic.  But such a buyer should know that they may have to make an offer on ten or more properties before they find a seller willing to negotiate 10% or more below their asking price.