A builder client of mine had been approached with an opportunity to purchase a large number of lots in the 70817 zip code area. He called me to ask if I'd analyzed sales in this particular area. I had not yet drilled down through my data to this particular area so I sharpened my pencil (actually my mouse) and proceeded to do so. Here are some of my findings.
| Zip 70817 Absorption (All Homes) | ||||||||
| Price | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | Current Inventory | Months Supply |
| $000-100K | 5.4 | 4.8 | 3.4 | 2.1 | 0.8 | 0.1 | 1 | 8.0 |
| $101-150K | 19.7 | 20.6 | 18.8 | 18.1 | 9.4 | 8.8 | 11 | 1.3 |
| $151-200K | 13.1 | 12.4 | 13.2 | 21.1 | 16.1 | 12.4 | 43 | 3.5 |
| $201-250K | 4.8 | 5.7 | 6.3 | 8.4 | 10.7 | 10.6 | 54 | 5.1 |
| $251-300K | 2.1 | 1.8 | 2.8 | 4.2 | 6.0 | 6.5 | 21 | 3.2 |
| $300-350K | 0.8 | 0.5 | 0.5 | 1.9 | 2.8 | 3.0 | 28 | 9.3 |
| $351-400K | 0.6 | 0.4 | 0.4 | 0.8 | 0.8 | 0.8 | 19 | 25.3 |
| 400K+ | 0.3 | 0.1 | 0.4 | 0.8 | 1.3 | 1.3 | 20 | 16.0 |
| Overall | 46.6 | 46.3 | 45.8 | 57.3 | 47.8 | 43.4 | 197 | 4.5 |
Zip 70817 Absorption | ||||||||
| Price | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | Current Inventory | Months Supply |
| $000-100K | - | - | 0.1 | - | - | - | 0 | ? |
| $101-150K | 2.2 | 3.0 | 1.2 | 1.0 | - | - | 0 | ? |
| $151-200K | 3.0 | 3.5 | 2.6 | 5.3 | 2.3 | 0.1 | 1 | 8.0 |
| $201-250K | 1.3 | 2.0 | 1.9 | 2.3 | 2.6 | 2.0 | 20 | 10.0 |
| $251-300K | 0.8 | 0.3 | 1.0 | 1.3 | 2.5 | 2.1 | 7 | 3.3 |
| $300-350K | 0.5 | 0.1 | 0.1 | 0.6 | 0.8 | 1.4 | 15 | 10.9 |
| $351-400K | 0.1 | - | - | 0.3 | 0.1 | 0.3 | 15 | 60.0 |
| 400K+ | - | - | 0.2 | 0.1 | 0.2 | 0.1 | 6 | 48.0 |
| Overall | 7.8 | 8.9 | 7.0 | 10.9 | 8.4 | 6.0 | 64 | 10.7 |
On first inspection, when looking at the detached single family market as a whole, it appeared that this might be a good market area for my client to invest in. When I examined just new construction, however, I was a little taken aback. The absorption rate for new construction is the lowest it has been in the last five years and there is currently an oversupply of new construction creating a buyer's market! The strength of the market is in re-sale homes. My advice to my client was be very cautious.
Don Stern
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