The Savvy Homebuyer's and Homeseller's Guide to Gainesville Real Estate
So, you've decided to buy a home in Gainesville. First off, CONGRATULATIONS!! Investing in real estate -- over the long term -- is one of the surest ways to increase your wealth.
Besides the most important things to consider when choosing your home....location, amenities, school district, distance to work, etc.....what other factors should you take into consideration?
One of the factors often overlooked in a homebuyer's decision-making process is the absorption rate, which is the numerical representation of the supply of homes vs. the demand for homes in any specific area.
A buyer's market is defined as a market where there is more than 7 months' worth of homes to sell in a given area or at a given price point.
A seller's market is a market where there is only 1-4 months worth of housing inventory available in an area or price point.
A normal market is typified by 5-6 months of housing inventory.
Have you heard the saying that all real estate is local? Well, that's true for absorption rate as well....
Consider the following:
In all of Alachua County, as of today (June 26, 2009), there are currently 1,582 single-family homes available for sale.
In May of 2009, 154 single-family homes sold in all of Alachua County.
In terms of absorption rate, this means it would take 12.4 months to sell all 1,582 homes if all other factors remained the same (e.g. no other homes came onto the market).
Let's break it down further, this time by price point:
There are 822 single-family homes for sale in Alachua County priced at less than $200,000. This equates to 9.45 months of inventory.
There are 800 single-family homes for sale in Alachua County priced between $200,000-$400,000, or 14.29 months of inventory.
There are 177 single-family homes for sale in Alachua County priced between $400,000-$600,000, or 16.09 months of inventory.
There are 68 single-family homes for sale in Alachua County priced between $600,000-$800,000, or 68 months of inventory.
There are 57 single-family homes for sale in Alachua County priced at $800,000 or more. No homes sold at that price point last month, so I'm not sure how to even begin to calculate how long it will take to sell them all.
What do these price point breakdowns mean for the savvy homebuyer researching their options in the Gainesville real estate market? It means that homebuyers are in the driver's seat and have much more leverage than sellers do in terms of determining the selling price of the home. Homebuyers who are financially qualified to purchase a home for $600,000 or more have the most inventory to choose from and therefore the most leverage in determining selling price at these levels.
What do these price point breakdowns mean for the savvy homeseller in the Gainesville real estate market?
1) If you don't have to sell right now, don't.
2) If you do have to sell, price your home competitively right from the get-go; and even if you price your home as competitively as you think you can, be prepared to take a financial beating.
3) What you think your house is worth is, on the whole, less important than what a financially qualified buyer who is ready, willing, and able to buy your home thinks it is worth.
Breaking absorption rate down by region,
Northwest Gainesville homes for sale: 685, or 11.81 months of inventory;
Southwest Gainesville homes for sale: 455, or 9.68 months of inventory;
Northeast Gainesville homes for sale: 113, or 14.12 months of inventory;
Southeast Gainesville homes for sale: 55, or 9.16 months of inventory.
What does this mean for the savvy homebuyer of Gainesville real estate?
The more months of inventory available for sale, the more leverage the homebuyer has in determining price and terms for the property.
What does this mean for the savvy homeseller of Gainesville real estate?
See above, and commit it to memory.
Absorption rates can be even more localized to zip codes, neighborhoods, school districts, etc. Please email me at firstname.lastname@example.org if you would like to receive a more detailed market analysis of a particular area.
Coleen DeGroff, MBA
Your Gainesville, FL REALTOR
Gator Nation Relocation - Specializing in drama-free realty for the hassle-averse
Coldwell Banker M. M. Parrish, Realtors
Gainesville, FL 32606