I have been looking at many other websites and blogs, something I do routinely.  I often see blogs that are all listings, and others with nothing but lifestyle information (that would be me!)   It is difficult to find them with a good balance of everything.  We are all trying to be the neighborhood experts, and some people communicate that to the client better than others.  The other day I came across a blog with nothing but reports on absorption rates for the various subdivisions and neighborhoods in the area.  Now I like reading blogs, but that one was a bit much, even for me.  How many consumers know what absorption rate is?  And why would they want to read a lengthy report about it? 

Too often we are guilty of using industry language with our clients and expecting them to understand it.  Even words like "inventory" mean tubes of toothpaste or boxes of cereal to them and they have trouble relating it to homes.  Ask your average Realtor what absorption rate is;  most professionals won't be able to explain it.  They sorta know what it is, but many don't know how to get there.  Consumers would much rather read an interesting story about how quickly properties are selling (or how slowly) and how it affected someone's purchase or sale of a home than read a chart, or even a sentence, full of numbers.  Keystone condo 

What got me on my soapbox out was that I decided I needed more real estate information to balance out my lifestyle posts and I started putting together numbers on Keystone Colorado properties.  Keystone is a major ski resort and is very popular with second home owners.  What I found was that in the last year we sold 75 condos priced under $200,000 in Keystone, out of a total of 430 sales.  That is almost 17.44% of all the sales.  At the moment, we have one property listed under $200,000 in Keystone!  It happens to be my listing; the studio you see to the left, and it has an offer on it today.  When it goes under contract tomorrow, our lowest priced property will be a studio for $214,900. The lowest priced one bedroom is $259,900.  Obviously, our market has changed this year. 

We sold 131 condos from $200-300,000 last year, but right now we only have 8 for sale.  Try and figure that absorption rate...it is less than 3 days!    I think they call it a tight market.  It means multiple offers and rapidly rising prices.  It also means that many people will be priced out of the market.  Our sales most certainly will go down this year, at least in number of transactions, but it isn't because the market is slow! If we had "inventory" in higher price ranges, clients would move up in price if they could, but from $300-400,000 we have 14 active listings, and between $400-500,000 we have 16.  The only price range that has any depth at all is over $1,000,000 where we have 28 active listings, a full 33% of our total inventory.  Last year only 6% of the sales in Keystone were over $1,000,000.  It is a strange market, and we are just past what is usually the peak of our listing season.  It will be interesting to see how it shakes out this year. 

 
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18 Comments on Do consumers really understand absorption rates?

I think it safe to say, in answer to the question and title of the blog, a resounding NO.

06/05/2007 10:58 PM by Steven L. Smith, Bellingham, Wa. Home Inspector (King of the House Home Inspection)


I'm with Steven.  A resounding NO.  Like a lot of other topics we are paid to steer them through.

06/05/2007 11:03 PM by Mike Jaquish Keller Williams Realty, Cary, NC (Keller Williams Realty)


I don't think most agents can explain absorption rate.

06/05/2007 11:16 PM by Rosemont Financial Inc


Some readers may understand it and love it. Others may move on.  The writer who does totally absorption rates probably is analytic and will know soon enough from their stats that the readers are all moving on, if in fact they are. 

If reading any blog doesn't interest readers move on.  

06/06/2007 08:07 AM by Maureen McCabe - Central Ohio real estate (Real Living HER)


They may not understand them, but do they want to? - that is the real question IMO.  My website tells me what blogs I am getting visitors from - and guess what - it is all of my analytical ones.  That's right - I have only gotten real leads from blog posts from that nitty gritty data.  And I even did mention the "A" word last night.  I had a lead from it this morning.  Coincidence?  Maybe - perhaps they are reading all of my blogs and they just happen to click to my site when they get to those reports.  Or perhaps that's what they are looking for. 

I guess the way I look at it is, give them what they are asking for - make it a variety to appeal to different types if you like- but if you don't give them what they want someone else will. 

06/06/2007 02:58 PM by Steve Scheer - Denver Real Estate - Highlands Ranch Real Estate (RE/MAX Masters, Inc.)


That was an interesting comment Steve!  I do think it a good idea to try to appeal to all types of people, from the analytical people to the ones who only care if it has a good party deck or not!  (See my active rain post titled "I am a Howard Brinton groupie"   The website I had seen had nothing but absorption rates for every neighborhood. 

06/06/2007 03:23 PM by Summit County, Colorado Realtor l Joanne Hanson (Coldwell Banker Colorado Rockies Real Estate)


I can see how if that's all you had, that wouldn't be very interesting.  But I have to say, it is interesting to me that no one is linking to my website when I write about neighborhoods.  It seems to be the numbers that get them clicking. 

06/06/2007 03:57 PM by Steve Scheer - Denver Real Estate - Highlands Ranch Real Estate (RE/MAX Masters, Inc.)


Joanne, You're so right about the importance of presentation.  The absorption rate stats may be important to a few people, but most people would do just fine with some kind of one-sentence summary.  I guess the same would be true for inventory stats for a particular market - the summary is usually all I need unless I'm a regular investor in that market.  It's true for all of us involved in real estate:  We want to present the truth, and we want to present it in a way that makes sense to the person who is listening.  What does that person understand best?  Stats?  Narrative?  Photos?  Personal phone calls?  E-mails?  We have to understand our audience.

06/06/2007 04:15 PM by James Eubank ~ Southern Colorado Inspections (Eubank Inspections of Southern Colorado)


Hi Joanne, realtors here in Florida would kill to sell even one condo in the past year.  In fact, several up-scale condo projects in the Miami area, are so bereft of buyers, the investors are giving up as much as 340k in deposits to get out of their contracts.

Terry Haugen - STAGE it RIGHT!

06/06/2007 11:39 PM by Terry Haugen STAGE it RIGHT! 321-956-2495 (Stage it Right!)


Didn't we all know that would happen in that kind of market?  It just can't keep up forever, with people flipping condos and making killings every time.  Sooner or later it has to stop.  The tricky part is knowing when!  Sounds like a good time for buyers to come in and get some deals, but knowing when the market has hit bottom is the other tricky part! 

06/07/2007 09:48 PM by Summit County, Colorado Realtor l Joanne Hanson (Coldwell Banker Colorado Rockies Real Estate)


Darn it Joanne....I have a potential buyer for that Gateway studio, but she's not coming out for another 10 days and as much as I tried to convince her to offer on it 'sight unseen', that is still a hard step for many buyers to take.  I guess in our market, he/she who hesitates loses out!  But to get back on the post topic, I agree there are people who absolutely love/crave detailed stats and then there are those whose eyes glaze over at the thought...I guess we just need to go with the flow and know what to provide to whom and when -- I do love this business.  NOW, if you can just set that little Gateway studio aside for my buyer!!!  ; )

06/07/2007 10:32 PM by Susie Leavens (RE/MAX Properties of the Summit)


It is verbally under contract and just awaiting signatures.  I just noticed the next lowest priced one at $214,900 just went under contract too.  Our Keystone market is crazy! 

We recently had a client make an offer on a $669,000 duplex  (not in Keystone, but it didn't matter) and they were one of 4 offers after 4 days on the market!  Luckily we are getting better at getting them for our clients and we were able to get this one too.  A hot market doesn't always mean making lots of money.  It means working harder, writing several offers sometimes before the customer realizes they must offer at least 97%, and maybe even full price right off the bat, and  that they have to move quickly.  It means working harder to hold it together when the buyer thinks it should be perfect since they paid full price, and the seller knows that the next buyer will pay more.  All the time, being an advocate for your buyer or seller if that is your agency relationship. 

06/07/2007 10:47 PM by Summit County, Colorado Realtor l Joanne Hanson (Coldwell Banker Colorado Rockies Real Estate)


I was at the Vail NAR convention this week and I heard agents from all over Colorado say the same thing:  Our inventory is low and our prices are sky-high.

WHY IS THAT??? 

06/30/2007 12:48 AM by Eliese Pivarnik, Colorado Group Realty, RSPS, Steamboat Springs, CO Real Estate (Colorado Group Realty, LLC)


HI Eliese,  I was at the symposium in Vail this week too!  Sorry I missed you.  I did meet someone from Steamboat named Pam, but didn't get to sit with you at all.  Regarding the prices going up, in your case it is because Intrawest bought Steamboat and everyone has dollar signs in their eyes.  It is also that the baby boomers are buying.  They are not particularly affected by the economic conditions and they are preparing for retirement.  The hurricanes and insurance problems have affected the beach areas, but the rest of us in potential retirement areas are still doing pretty well.  We also did not have the 30% or more appreciation that was causing investors to flip properties and drive prices up higher still, so didn't feel the negative impact when that bubble burst.  Not only did the beach areas see that, but also Vegas and Phoenix and othe sun belt areas. 

I really prefer a more "normal" market, what ever that is, but the real estate market is cyclical; that is just a fact of life, and we need to always be preparing for the bad times.  They will come!

06/30/2007 04:59 PM by Summit County, Colorado Realtor l Joanne Hanson (Coldwell Banker Colorado Rockies Real Estate)


Great presentation on this subject.

I use these statisticcs with both buyers and sellers.

Se my post at: http://activerain.com/blogs/jpeters

04/05/2008 09:39 PM by Joseph Peters


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Real Estate Agent: Summit County, Colorado Realtor l Joanne Hanson (Coldwell Banker Colorado Rockies Real Estate)
Summit County, Colorado Realtor l Joanne Hanson
Frisco, CO
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Coldwell Banker Colorado Rockies Real Estate

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The Colorado mountains, real estate, ski resorts, lifestyle and vacation homes is my focus. We talk about buying and selling ski condos in Breckenridge, Keystone and Copper Mountain. Homes and land in Frisco, Dillon and Silverthorne are also in our market area

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