Gig Harbor Undressed

Another look at Gig Harbor’s Real Estate Absorption Rate

For my weekly look at the Gig Harbor real estate market, I wanted to revisit the absorption rate of houses for sale in the area.  As a reminder, the absorption rate measures how long it will take for our current home inventory to be completely sold, or absorbed.  To calculate this number, we take the current number of homes for sale in Gig Harbor, and divide that by the number of houses selling each month. 

Currently there are 572 homes for sale in Gig Harbor.  Over the past 3 months, we are averaging 24 home sales per month (only 20 homes sold in Gig Harbor during January).  At this current pace, if no more homes were listed for sale, our current inventory wouldn’t be sold until January of 2010!  Port Orchard has a much better scenario, as their absorption rate is only 12 months, exactly half that of Gig Harbor.  Port Orchard has 621 homes for sale, and is averaging 48 home sales per month over the past 3 months. 

So what do these numbers mean for you if you are needing to sell your home soon?  PRICE IT WELL!  Houses are still able to sell quickly, when they are priced correctly.  Of the 72 Gig Harbor houses to sell the past 3 months, the average days that they spent on the market was 191 days.  However, 24 of the 72 homes sold in 3 months or less.  This is a perfect example of how house pricing affects the statistics. 

If your house is overpriced to begin with, not only will it be sitting on the market with the other 572 homes, but it will have the additional competition that gets listed each week.  On January 6 of 2008, there were only 500 homes on the market in Gig Harbor.  You can see how our inventory is rising.  An overpriced home quickly gets pushed further and further down the list, quickly becoming a “stale” listing.

So how do you know where to price your home?  Have a Realtor analyze what similar homes have SOLD in the past few months.  Don’t make the mistake of basing your home’s value on what else is currently on the market.  Let’s say the data for SOLD homes shows your value to be around $455,000, for example, but you’re positive your home is nicer than the one down the street listed for $485,000, so you decide to list at $495,000.  What happens?  The one listed for $485k has been sitting, so they do a price reduction to $470k.  A new home comes on the market for $465k.  You drop yours to $475k to try and keep up.  Meanwhile, the other two homes, still over priced, do price reductions, and now you’re chasing the market.  By the time your home sells, it may have been sitting for 9 months and been reduced $50k.  Don’t let that happen.  Look at the SOLD numbers, swallow your pride, don’t gamble, and let your house sell.  Make sure you hire a Realtor who can swallow his/her pride as well.  Many real estate agents have been accused of “buying” listings; that is, telling the seller they can sell it for more than any other agent just to get the listing, only to start the priced reduction game later.  Don’t get me wrong, this isn’t the case for every house that has price reductions.  Sometimes the seller and the agent just guess wrong; sometimes there are factors that can’t be controlled.  If you under-price your home, chances are you’ll get multiple offers which may end up driving the price of your home up even more.  If it’s not under-priced, and is in fact priced well, it should sell within a month.  There are so many buyers out looking right now, tired of the over priced homes, that the instant a well priced home pops on the market they’ll be ready to snatch it up.  For more information on the area’s absorption rate, or further details on preparing your house for sale, please feel free to contact me.