Before we dive deep into interpreting market data, let’s define a few words– that, let’s be honest, we probably should have been taught in high school. (You know, since Real Estate is the backbone of the “American Dream”)
Seller’s Market: There are more buyers than there are homes available. Result = Prices increase (Guess what? Tacoma’s homes are selling for 101% of their list price, so, we’re in a seller’s market)
Buyer’s Market: There are more homes than there are buyer’s. Result = Prices decrease (and you’re home better stand out) [link to being #1] (Sellers, you better be ready to fork over some concessions)
DOM: Days On Market – how long a home has been sitting on the market, waiting to be swept away by an offer
Pending Homes: How many homes are under contract but not closed
Active Homes: The homes available to buy
Closed/Sold Homes: Homes that are bought and officially someone else’s
Absorption Rate: The rate at which homes sell in an area. The higher the absorption rate, the faster homes are selling. Absorption rate is calculated by taking the number of pending homes in a market and dividing it by the number of active homes.
GREAT. Now that’s covered. Let’s go deep.
As we all know, Tacoma is in a Seller’s Market. Tacoma increased in population almost 2% in 2016 and it’s still growing. Since July 2016 the average home sales price increased from $267k to $313k July 2017. Are there bidding wars? Yes. Are there insane cash offers? Yes. Are homes flying off the market just as quickly as they are listed? Yes.
HOWEVER, (queue dramatic music) just because this is a seller’s market doesn’t mean everyone is getting the Extreme price they want.
As it turns out, buyers are smarter than ever, are better informed, & have high expectations. They’ve either been burned by the market before or have watched someone they love get screwed over. They know to look out for “lipstick on a pig”. Buyers know they have a right to an inspection and they want a broker who doesn’t see them as a paycheck.
“But Seattle is selling homes that are terrible for $600K!”
Tacoma isn’t Seattle. We don’t have goliath companies that are providing six figure incomes for households. We (generally) can’t afford to pay loads of money for garbage — and we don’t want to. Tacoma wants quality product if we’re going to pay a crap ton of money for a home. Tacoma buyer’s value their quality of life and want to believe they are getting the house of their dreams.
Ifyou’re a seller you may be asking “That’s nice, but now what?”
Well, your home better be the best home it can be.
I’m not saying you need to start adding shiplap, granite counters or that 2nd bathroom. I’m not even saying you need to change out the orange carpet from 1978.
What I am saying, is you need to be realistic about your pricing. (Read more about that here)
To really understand Tacoma’s market, let’s talk about absorption rate.
The absorption rate of Tacoma homes when from 147.8% in March, to 111.1% in June, with July closing out at an absorption rate of 94.3% . That’s a 53.5% drop from March to July.
Why Absorption Rate is important: It’s the temperature gauge of the market.
The higher the absorption rate, the the higher the prices, the faster your home flies off the shelf. Tacoma had 245 homes for sale inMarch, which, let’s be honest, is a ridiculously low amount, which explains that 147.8% absorption rate. However, July closed out with 506 homes for sale & 477 pending giving us that 94.3% absorption rate. The market appears to balancing from the chaos of the spring, but only time will tell. Stay tuned and get updated by filling this neato form out: link to form.
This is a lot of info, let’s wrap it up:
Seller’s – Get a Realtor who understands the “funkiness” of Tacoma’s market. Get a Realtor who isn’t afraid to be honest with you, who can show you the data and price your home right. Find a Realtor who can help you be #1 (link to be #1)
Buyer’s – ALSO get a Realtor who understands Tacoma’s market. Get a Realtor you can trust will fight for you and help you navigate the chaos. Get a Realtor who isn’t going to be pushy just because they want to make a sale.
Better yet, shoot me a message or give me a call: 253-548-7941. Also, read This Post about what justifies a home’s price. It’ll help. And that’s the truth.
Til Next Time,
All Tacoma market data provided by the NWMLS, data from date of 8/7/17
We had a lot of numbers in this post & believe in sourcing! Want the data? We’re happy to send it to you.