I haven't gone out of my way to promote this blog as yet, but a few people found my first posting. Thank you! Kym hit the nail on the head. The lower price points are moving better than the higher priced homes in Tacoma, University Place and Fircrest, probably for the very reasons she cites in her comment. First time buyers are out hunting for good deals. Importantly, they do not have homes to sell, which means they are in a position to act when they find something. Lending standards have tightened, so some of those deals don't sail through to closing the way they once did, but the fact is, those are the houses that are moving. So your gut, Kym, is right on the money! You win the Golden Gut award. Maybe I'll come up with a more appealing name, or maybe Kim, as debut recipient, might be inclined to suggest one.

The best price category in terms of Sales Ratio is sub $200,000. Absorption there, while not great, is at least in an acceptible range. What is very striking about this study from today is the number of pending sales over $700,000. I don't recall a time when there were ZERO pending sales in such a sweeping range.

Pending Active Sales Ratio
Overall 104 733 14.2%
Sub $200K 29 127 22.8%
$200-$300K 43 249 17.3%
$300-$400K 20 150 13.3%
$400-$500K 7 72 9.7%
$500-$600K 2 52 3.8%
$600-$700K 7 26 26.9%
$700-$800K 0 21 0.0%
$800-$1m 0 24 0.0%
Over $1m 0 22 0.0%

Is this bad news? NOT if you are a buyer! This is what they call a buyer's market... not a waiter's market. Interest rates are at an historically low point. Money is affordable, inventory is plentiful, and prices are depressed. I don't have to brainstorm my next posts. This study leads me in the direction I want to go. Stay tuned for more on why buyers should not be sidelined by dire news stories about the economy. In my opinion, there are great times to buy and great times to sell. We won't know for sure until the dust settles and December 2008 is in the rear view mirror, but I am increasingly of the opinion that now might just be the time to buy that Tacoma real estate.

I get asked this question a lot. Rather than rely for my answer on gut feel alone, I like to continually understand what is really going. There is a nifty tool for that; the sales ratio.

That sounds mathy, but the math couldn’t be easier. Sales Ratio is Pending Sales divided by Active Listings. No matter what market you are talking about, no matter the market segment within that market, the sales ratio sheds light on how well the market is absorbing inventory. It is a snapshot of the moment you happen to pull the numbers. (It can change the second after you gather the data.) For example: Let’s say there are ten actively listed homes meeting whatever criteria you query, and there are five pending sales. The sales ratio is 50%. Incidentally, a result of 50% signifies to us a market in balance, favoring neither buyers nor sellers.

Below 50% = Buyer’s Market (large supply of homes, low demand)

50% = Balanced

Over 50% = Seller’s Market (shortage of inventory, high demand)

The other day (12/1/08) I pulled the numbers for the North End of Tacoma, Central Tacoma / Hilltop, University Place and Fircrest. There were 746 active listings and 111 pending sales, for a 15% Sales Ratio.

To put that in perspective, two years ago there were 633 active listings and 187 pending sales, or 30%. Three years ago there were 424 active and 233 pendings, or 55%. I should note that within some price categories, that sales ratio exceeded 100%. At any given time there are hot price points, and slower ones. I’ll break down the numbers by price category later. For now, I wanted to lay the groundwork by defining the term so that I can refer back here later. From your gut, what price categories do you think are moving right now?