Price Islands
When establishing the market value for your home, sellers should focus on the prices of comparable sold homes in their area. Sometimes I’ll find a neighborhood where most home sellers have apparently focused on the list prices of comparable homes in their neighborhood instead of on the sold prices. The entire neighborhood ends up as what I call a “Price Island” where everyone is overpriced and very few homes sell.
I give an example of the subdivision Santa Fe in the master planned community of McCormick Ranch in Scottsdale, Arizona where just about everyone overpriced their homes for a long, long time and there were very, very few homes that sold… until home prices eventually broke big time.