Pierce County Housing Reports April 23, 2015

First Quarter 2015 Pierce County Housing Report

We appear to be in for a wild ride in 2015 when it comes to the Pierce County Housing Market!  So how do you navigate it if you are a seller?!  What are the best strategies for a Buyer to get the home they really want?  I'll discuss that and more in this article but as always let's start with the Pierce County numbers as of March 31st.

 

Inventory – DOWN – 15.6%

Closings – UP – 13.1%

Median Price – UP – 8%

New Pending Contracts – UP – 53.7%

These Year over Year numbers tell us the market is hot, in fact the Months of Inventory (MOI) is at 2.7 based on last month's closed sales.  This is the lowest since Q3 of 2005. Anytime the month's worth of inventory dips below 3 months we have a market environment that favors sellers and encourages price appreciation.  Also, year over year inventory levels have been declining steadily in Pierce County so far this year.

The primary reason for these dramatic declines comes as no surprise…Pierce County home buyers have been busy!  There may not have been much snow in the NW mountains this year but our Pending home sales chart looks like a ski jump with Pending sales up 33% for Q1!  Inventory is the biggest key to how our market plays out for the balance of 2015.

 

So inventory is down and sales volume is rocketing. "If I want to sell my house I can ask whatever I want and buyers will flock to my door…right?!?"  Not so fast! The answer is…."It depends".  Turns out, like so many things in the world of statistical sound bites, there are some distinct differences in the experience you can expect as a buyer or seller depending on what price range you are in. Bear with me as I set this up.

 

There are 2 data points when evaluating a market that are, IMHO, the most valuable predictors of what to expect as a buyer or a seller.  One is the Sales Ratio; I explained the Sales Ratio in a blog last year, if you want to refresh you can link to it here .  In a nutshell 55% is a balanced market, the higher the sales ratio number, the hotter the market, and the more likely things are in favor of the seller.  The second number is Months of Inventory (MOI), with this indicator the lower the number, the more likely is that sellers are in control. Low MOI says at the current sales pace the market will "run out" of inventory if new properties don't come available or demand slows down.

 

Overall PC has a sales ratio of 64% and MOI of 2.7.  Both numbers tip in favor of sellers.  Combined with the trends discussed in my opening remarks you'd think it's time for prices to move higher across the board.  If you are working with homes under $500,000 you'd be absolutely right..you may even be accused of understating the situation, but if the home is over $500,000 it may require a closer examination. Take a look at the following;

 

Millennial buyers, first time buyers, investors, and more are super heating the market under $250,000.  I would argue that a 90% sales ratio is not even sustainable, prices have to increase to temper the demand and allow the inventory level of only 1.9 months supply to eventually come back in line. A buyer in this price range needs to choose a broker well networked and steeped in local knowledge. One that is plugged into technology that receives quick market alerts and is accessible; able to move quickly for you when good properties come available. In this price range the broker needs to be able to advise you on how to groom your offer for greater likelihood of acceptance without giving away important rights you need as a buyer and ensuring your transaction is financially safe.

 

Conversely, between $500,000 and $1,000,000 a 21% Sales Ratio and almost 8 months of inventory is not a market condition that pushs prices up. Sellers here need to carefully evaluate their pricing strategy based on sound data that their broker can provide.  If the Pierce County home is in the higher end, they are likely entering a market crowded with competition and it is worth considering the Impact of Price Visibility as shown on this chart;

The other take away I see in these numbers is the fact that if you're worried about finding your new dream home after selling the one you're in now, it may not be a concern if you are moving up into a larger or more deluxe dwelling. 

 

In this ever dynamic market, sound professional advice and guidance is key to your real estate success.  One newspaper or newscast headline does not fit all, and without local expertise with real time data it is easy to mis-step in such a fast paced real estate market.

 

 

Pierce County Housing Reports January 7, 2015

2014 Median Home Prices Up Almost 10% in Pierce County!

2014 Median home prices in Pierce County are up 9.76% from 2013. John Gillie with The News Tribune goes into detail here

Listing BlogsPierce County Housing Reports October 14, 2014

October 2014 Pierce County Housing Report

 

 

It's that time again to check in on the Pierce County Housing Market. This month we have another neutral month based on the year over year stats I always lead off with, but I also found a few goblins we may want to keep an eye on.  Here are the headline numbers as measured on September 30:

 

Inventory – UP 6.5%

Closings – UP 9.1%

Median Price – UP 1.4%

New Pending Contracts – 31.7%

 

These are Year Over Year Numbers and they look pretty good. Inventory is UP, we like that, the market needs more houses to sell as we still have less than 4 months supply based on closed sales.  Median Price is UP only slightly but that's not a surprise,  we talked last month about price increases slowing.  Pending contracts are UP so much that it is a great indication we are in store for a strong sales flow during the 4th quarter as we wrap up 2014!  While I prefer the pumpkin is "half full" viewpoint, I have to say the market hasn't "felt" like these numbers. When talking with other brokers recently, I've noticed some chatter about a slower market; so I dug a little deeper.

 

 

Month Over Month transaction volumes are much different with Pierce County DOWN 13.4%. Turns out this August vs September drop in closed sales is normal, at least compared to 2013 when the same thing happened.  However in arriving at this conclusion I viewed the volumes by price range and saw a couple of items you may find interesting.  In the chart above you can see the very important $250,000 – $500,000 price range things really took a break with volume dropping 20%. These are the homes that buyers are "moving up to" and it is just this year we have been able to say the recovery took hold in this sector.  This segment of the market represents over 35% of our Pierce County transaction volume.  I don't know if it is widely understood that 95.7% of the Pierce County Market happens in this price sector….and below!  

 

 

This shows that only 4.4% of all Pierce County transactions were over $500,000.  In case you were wondering, listing inventory over $500,000 disproportionately makes up 13.3% of the total number of homes for sale.  Pierce County Housing Market participants need to know, the "Work-Horse" price sector is under $250,000 with 41% of the inventory creating over 60% of the sales!

 

We have a healthy volume of Pending Sales so if history repeats itself the coming months should provide a nice increase as we wrap up 2014. 

 

September's numbers are a fitting reminder that there's a limit to how robust our recovery can be characterized. 

 

Month by month we are achieving normalization and as I've always said; "markets don't recover in a straight line" so there may be a bump in the road from time to time. Those that approach this market with realistic expectations based on detailed market analysis will find success.

 

Give me a call or shoot me an email, it is always good to hear from you!