The bid-ask spread continued it's downward trend this quarter, reaching its peak low in November 2018 since we started tracking in June 2017. While it's a positive sign that the bid-ask spread is smaller than it was a year ago, the main factors here to consider are the decline in sales volume and the length of time houses are sitting on the market. The graph below illustrates the steady drop in bid-ask spread over the last year and a half.
While the average sales price hasn't changed much over the last year, because of the low number of transactions in 2018, the average asking price for houses on the market has consistently been going down over the last year. The reason for this is that the same houses are still sitting on the market, and asking prices continue to drop to adjust to the new market. The more the average asking price drops, the closer it is to the flat average sales price over the last 12 months. The tight bid-ask spread and lower asking prices will likely lead to an increase in volume at some point in the near future, when buyers feel that the bottom of the market has been reached and they are more ready to make offers.
Since June of 2017, we've been tracking and recording the bid-ask spread for Upper West Side townhouses. The bid-ask spread represents the percentage difference between the current average list price and average sales price. To collect the data, we calculated the average sales price of townhouses over the last 12 months on the Upper West Side, as well as the average ask price for townhouses currently on the market on the Upper West Side. The percentage difference between the two averages represents the spread.