Tucson, Vail Home Sales: It’s a Seller’s Market
This article authored by: Rob Hallberg
In Tucson and Vail, Arizona, the current housing market is considered favorable to Home Sellers; what makes it a “Seller’s Market”? Let’s take a trip back down memory lane and discuss Supply and Demand, Economics 101.
When Demand exceeds Supply, the market is favorable to those providing the Supply, whether it be iPhones, cars or homes. Prices often rise in a supply-favored market, as Buyers are usually willing to pay more to satisfy the demand.
In the housing market, you also have to consider past history. How quickly or slowly have homes sold in the past, and what is considered a “normal”. A “normal” market in real estate is one that follows average sales patterns and prices are generally flat. Demand and Supply are in “balance” and neither Buyers nor Sellers have a particular advantage.
What are “average” sales patterns? In the Tucson and Vail, AZ market, we use a calculation called “Months of Inventory” to determine the state of the market. Months of Inventory answers the question, “If no additional homes enter the market, how long will it take for the homes currently listed to be sold out?” The calculation takes into account how quickly homes are selling and compares it to how many homes are listed.
For example, if homes are selling in a particular market at a rate of 3 per month, and there are only six homes on the market, then the Months of Inventory for that market is 2 (6/3 = 2). When there are only two Months of Inventory, it is considered a “Seller’s Market” as there few homes for Buyers to even consider for purchase.
Conversely, if there are 30 homes on the market and sales average two per month, then Months of Inventory would equal 10 (30/3), which is very much a Buyer’s Market. Sellers will typically reduce prices in this market.
One more point. Markets may fluctuate by area and price range, so the most meaningful data will be specific for those factors. For example, the highest priced homes, $500,000 and up, typically take longer to sell regardless of the overall market and Months of Inventory is almost always high. But in this same market you will find that homes priced for $300,000 or less are moving quickly and it is considered a Seller’s Market.
In the greater Tucson and Vail Markets, a Months of Inventory in the 5 to 6 month range is considered a “Balanced” market; 4 to 5 months is considered slightly favorable to Sellers, and less than 4 months makes it a Seller’s Market. In Tucson, all homes listed for $225,000 or less are selling in less than 4 months. In Vail, homes listed for $275,000 or lower are selling within 4 months or less.
But what about prices? You would expect prices to be increasing in a Seller’s Market but the results are mixed. In Tucson, average sales prices have actually fallen slightly since July, but are just now starting to increase. In Vail, prices also dropped during the Summer but started rising in August.
What advice would I give a Seller or Buyer in this market? Prices are still very negotiable in most areas but some markets are more desirable than others, and homes are moving quickly. Research and analysis of the sales in the area are critical to determine what is a fair market value. This is where a good Realtor that KNOWS the area can make a big difference in negotiating the sales price.
Rob and Catherine Hallberg are Associate Brokers with Long Realty, a Berkshire-Hathaway Affiliate and Southern Arizona’s largest Brokerage. Since 2008, they have been ranked in the top 5% to 8% of all U.S. REALTORS®. Send Rob and Catherine an email for a fast response to your questions; for an even faster response, Call (520) 407-8667.