Absorption Rates are
all about supply and demand.
Absorption rates vary widely from town to town and neighborhood to neighborhood, and also from price range to price range within those communities.
If you are trying to sell your house, or even if you're in the market to buy, one of the pieces of information that should be factored into your pricing or offer strategy is the absorption rate for homes in your specific community and PRICE RANGE.
An absorption rate will tell you, based on current market activity, how many months, or even years, it should take to get your house sold in our current market, at a particular price. The formula is really very simple if you have the statistical info that you need.
Let's say you have a home to sell for $250,000. And let's say that there were 40 homes that sold for $250,000 in the past year. Currently there are 10 competing $250,000 homes. It's easy to see that with 40 sales a year, and 10 homes on the market, it should take 3 months (1/4 of a year) for the market to naturally absorb the existing inventory of $250,000 homes. The absorption rate would be 3 months for $250,000 homes in your community.
Absorption rates vary widely by price range. It's quite an eye-opening statistic.
And it shows us that locally it really depends on price range whether it's a buyers market or a sellers market. A six months inventory of homes is generally considered to be a balanced market. More homes than that would make for a Buyers market, fewer would make for a Sellers market.
According to the statistics compiled at the end of January 2019 in the Coeur d'Alene MLS, it is a definite Seller's market in all price ranges below $350,000. It's a balanced market between $350,000 and $500,000. It's a strong buyer's market in all price ranges above $500,000.
I have absorption rates for Coeur d'Alene, Post Falls, Hayden, Rathdrum, Spirit Lake, Silver Valley and Sandpoint. Also broken down for condos, multi-family, waterfront and properties over $1M.
Call me if you would like to find out YOUR absorption rate!
The more competitive your niche in the market, the more competitive you will need to be in pricing, condition, staging and marketing. Knowledge is power, and anything you can do to give yourself a competitive edge will payoff in spades!
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