In 2007-08, the Tucson real estate market experienced prices that fell in a historical slide and for many years, I specialized in working in working with homeowners who had to short sell to avoid a foreclosure. For more information on the short sale process, see Short Sale Information.
Now, however, the market has shifted again and we have been experiencing a slow but steady rise in prices since 2011. In general, this has been very positive. It is important to keep in mind, though, that all real estate is hyper local. Some neighborhoods are increasing at a faster pace than others, so it is important to take information about the general health of our market as a starting point to evaluate what is happening in your particular neighborhood.
In order to understand market conditions in your neighborhood, I recommend that you meet with an agent who will provide you with a Comparable Market Analysis as well as one who understands the other factors that affect your home’s ability to sell quickly at the price you want BEFORE putting your home up for sale.
In reality, there are a lot of factors that play into how quickly and for how much a home can sell in any given market. Here are the main factors:
Pricing – This is number one. A home must be priced to attract buyers in a competitive market. If you have your home listed for sale and are getting regular traffic you may be priced right but just waiting for the right buyer. If you are getting no traffic, then it is time to reduce your price until you get to the point where buyers are interested again. Pricing can also be a tool that Sellers choose to speed up or slow down the sale of the home. For example, if you absolutely needed to sell in a few days, you could reduce the price to 10-20% below market value and start a bidding war. You can also reduce in smaller increments to reignite interest in the home when the buyer traffic has leveled out or slowed down.
Condition & Features – No matter what other market conditions are at work, the features and condition of your home will ultimately attract that one buyer. To prepare to list your home for sale, make repairs, declutter the closets, and if needed, apply a fresh coat of paint inside and out. An agent can consult with you and give you a personalized list of to-do’s to make your home shine.
Marketing – This is important because it allows buyers to be aware that your home is for sale. In today’s Internet world, media such as photos or video must be included and highlight the home’s best features to spark that interest. Sometimes homes sell just by being put up on the MLS with no real marketing because a certain buyer was waiting for that type of home. Regardless, it is best to market my properties to the fullest extent to optimize their chances of selling for the highest price possible.
Supply & Demand – This one is very fluid and can cause the best house to languish on the market in slow times and the most deficient house to be snapped up in fast times. The interesting thing about this is that supply and demand is different for different price tiers, different areas of town, etc. For example, I recently ran a search in the 85747 zip code and found that homes in the $50,000 to $100,000 price range have an average DOM (Days on Market) of only 23 days. This includes the good, the bad, and the ugly. In the price range of $250,000 to $300,000 in 85747 the average DOM is 65. If you are priced just above a price tier that is experiencing a lower DOM than your price tier, you may want to consider adjusting your list price so it is just within that tier (For example, reducing from $305,000 to $299,000).
Absorption Rate – This number is very telling, but I don’t see very many agents talking about this or taking it into consideration. Basically, you look at how many homes have sold in an area over the past 6 months. In 85747 for homes between $250,000 to $300,000, there were 17. You divide that by six to get a monthly number, in our case 2.8. Then you take the current homes on the market (active and under contract since they haven’t sold yet) and divide that by 2.8 to see how many months it would take for the market to “absorb” all the current homes if no new ones came on. In 85747, the absorption rate is currently at 14 months. A good market is about six months, so we are still slow in this area. If your absorption rate is slow then your Days on Market will naturally be higher as well.
If you are thinking of listing your home and would like to find out where the numbers are in your market, give me a call at (520) 481-3695 or send me an email at email@example.com.