Truckee Real Estate – Buying, Selling & Market Conditions

Selling your real estate in Truckee is not about guessing- it is both a science and an art.  The science is in the numbers and the art is finding the balance between a special property and market conditions. We have all heard the terms “sellers market” and “buyers market”. These are fundamental measures of market conditions.

• “Sellers Market” conditions exist when there are between 1 and 4 months of inventory.
• “Balanced Market” conditions exist when there are between 5 and 6 months of inventory.
• “Buyers Market” conditions exist when there are 7 months and more of inventory.

So what is “Absorption Rate and Months of Inventory”? 

Absorption rate and months of inventory are mathematical calculations, based on current and past market trends that help us estimate how long it will take to absorb the current active inventory in a given area or market segment. The total number of available homes is divided by the total number of homes sold in the previous month. The resulting number represents the number of months it would take, at that same pace, to sell the entire inventory of homes.

For example, let’s say that there are 24 similar homes currently on the market in Tahoe Donner and last month 3 comparable homes sold. The absorption rate is 3 (3 sales/1 month = 3) and the months of inventory is 8 (24 current inventory/3 absorption rate = 8).

The chart above shows us absorptions rates and months of inventory for Tahoe Donner single family homes. The absorption rates were based on a monthly average of sales over the last 3 months (2nd QTR stats) for each price segment. Current inventory for each price segment was divided by the corresponding absorption rate and months of inventory were determined.

The market segment for homes up to $500K, with 6 months of inventory, is the most balanced while all other segments are strong  ”buyers markets”. There have been no sales prices over $1,250,000 in 2009 therefore it is not possible to calculate an absorption rate (nothing has been absorbed) nor months of inventory.

Understanding market conditions is powerful knowledge for both buyers and sellers. It can help in the following ways:

1. For Sellers – Realistic Selling Prices:
   As a rule of thumb…The longer your property is on the market the more likely it is that you will see price reductions. This means that it is of utmost importance that you price your property correctly for the current market conditions. If you need to sell your home, it must be better than its competition. In a given market segment, the most desirable home at the best price will sell first. Absorption rate is a concept and practice that is often over looked by many Realtors and lack of knowledge can lead to properties that don’t sell, expired listings, numerous price reductions and disappointed sellers.
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2. For Buyers – Realistic Purchase Offers:
   Knowing the market conditions in the specific areas you are looking to buy in will prepare you for negotiating.  As a buyer you may have greater success negotiating in an area or market segment where there is more inventory and the seller may be more motivated to sell!

If you have considered the idea of selling, please give us a call at 530-412-0583 or send an email to karen@huntoonrealestate.com .We will establish a value for your property and design a selling strategy and marketing plan. We thoroughly research market areas both before and during our listing periods as good knowledge of the market is critical in selling a home and allowing Sellers to get the most money out of their homes and to sell in the shortest period of time.

Now, more than ever, it is important to take the guess work out of selling and talk with a Realtor that understands the art and science of pricing a home in todays market conditions. Give us a call 530-412-0583.