Is your local real estate market one that's "Cool for Sellers" or is it a "Red-Hot Buyers' Market"?

If you're like most homeowners, you're probably wondering, "just how is the market holding up for houses like mine?"

You may even have diligently read all sorts of market data about sales and prices being down (or up) in your city.

The trouble is, statistics about your city will tell you very little about the market as it applies to your specific property! Here's why:

1. Location
2. Location, and
3. Location (aw, you guessed it!)

This "truism" is as true as ever, and "location" does NOT mean your city. It is much more specific than that. It refers to your immediate neighborhood, and adjacent properties, services, and amenities. Within the same city, it is common to have a buyers' market in one neighborhood, while in another neighborhood not far away it is a strong sellers' market!

Absorption rate is a top-notch indicator of how strong a buyers' or sellers' market exists in an area. Absorption rate is a way to assess how long it would take to sell ALL the existing homes on the market, assuming the rate of sales stays constant and no new listings are added to the pool. To calculate monthly absorption rate, you take all the listings that are on the market in the target area, and divide by the number of listings that sold in the past month in the same target area.

This tells us how long we could expect it to take to sell all the current inventory in an area, IF the rate of sale stays the same and no new listings are added. Of course, in reality, other sellers do put their houses on the market, making things even more challenging!

This is why the higher the number of months in the absorption rate, the more of a buyer's market it is!

The chart below illustrates the absorption rates for the various areas of the city of Albuquerque, New Mexico, and shows how location is what really determines whether you, personally, are selling in a buyers' market or a sellers' market, because the absorption rates vary widely, even among areas in the same city that are geographically close to each other. So, let's take a look at the chart:

This chart is based on data from the Southwest MLS for single family, detached homes that were on the market or sold in the preceding 30 days, as of July 8, 2007.

Remembering that it's "Cool for Sellers" vs. a "Red-Hot Buyers' Market," it's easy to see from the color-coded bands above that certain areas of Albuquerque are still currently very much in a sellers' market, while other areas are definitely in a strong buyers' market .

You're a very "cool seller" right now if your property is located in Sandia Heights, for example, where the absorption rate is under 3 months! In fact, many areas of Albuquerque still fall in the blue to green color bands that indicate a sellers' market. Most areas of the Northeast Heights, for example, fall in this range, as do the close-in areas near UNM, the Southeast Heights, and the Near South Valley.

The yellow band indicates a balanced market, with home sales moderately balanced, and supply and demand fairly even. Many Albuquerque areas are currently in this situation, including UNM South, downtown, and most of the Northwest areas of town.

So, where are the "Red-hot Buyers' Markets" in Albuquerque, New Mexico? A glance at the chart will demonstrate instantly that the worst absorption rate is currently in Four Hills, with an absorption rate of almost 17 months, currently. The only other Albuquerque area that's up in the red bands is Foothills North, home of the new and highly luxurious High Desert area.  Buyers, this would be a great area to go bargain-hunting, with the long marketing times these aras are currently seeing. Sellers in these areas, of course, need to make expecially sure that their property shows its best, is attractively priced, and is aggressively marketed by a top-notch Albquerque real estate broker!

If you are looking to sell your home, make sure your prospective real estate broker keeps you informed about the market conditions in your specific area, not just in your town as a whole. The absorption rate for your area will help you determine how agressive you need to be with pricing, staging, and marketing your home to maximize the likelihood of a prompt sale!