Just a little less than one year ago I did an article on the Sun City Grand real estate absorption rate. I decided to revisit this to see how real estate inventories for Sun City Grand compare this year to last year. Those of us who specialize in selling Sun City Grand real estate have been watching our inventory (homes for sale) drop to the lowest numbers we've ever seen.
But you have to take a look at the bigger picture. Are these homes selling? Or are they just being taken off the market. As I just reported in my blog post Sun City Grand Real Estate & Homes Sold - June 2009, we had 45 homes/condos that sold last month. In June of 2008 we only had 19 sales. hmm...
So what is an absorption rate? The actual definition is: The number of weeks (or in my example, months) it takes to sell the current inventory at the present rate of sales
For consumers unfamiliar with the term or how this is calculated, it is actually quite simple. You divide the current inventory of homes by the previous months actual sales to determine the number of months inventory you have on the market.
Many agents will give you an across the board figure. It is my experience however, that people looking for a vacation villa are not really concerned with how many golf course properties have sold or how long the current inventory will take to sell. It is irrelevant to them and these numbers can sometimes skew the the picture for non-comparable properties.
So, I like to break the numbers down. Let's take Sun City Grand for example. As of today, July 1st, we have 31 Sun City Grand golf course homes on the market. Last month we sold 4. This gives us an absorption rate of 7.75. Or, in plain english... it will take aproximately 7.75 months to sell the current inventory of golf course properties, if all other conditions remain the same. This is up from last year when we were running closer to a 5 1/2 month supply of homes and is probably a direct result of most people's retirement portfolios plummeting this last year.
Now let's look at Sun City Grand non-golf course single family homes. We currently have 135 homes (not including condos) on the market and we had 40 that sold last month. Based on these numbers, it will take aproximately 3.37 months to sell the current inventory. Last year at this time we were running at a 6.45 month supply of single family homes. hmmm...
A market is generally considered "normal" when you have a six month supply of homes on the market. Anything above that number would be considered more of a buyers market and anything less is usually considered a sellers market.
Market conditions are REGIONAL and can even be quite different in relatively small geographical areas. It comes down to supply and demand within these unique communities. For Sun City Grand, this next year may see golf course properties continue to stay on the market a little longer BUT... non-golf course home prices could very well be nearing the bottom and we might start seeing them rebound a little. This will only occur if our inventory of these homes stays down while the sales remain strong.
Now let's look at some of the other Arizona retirement communities:
Sun City West golf course homes - 4.07 month supply (last year 6.85)
Sun City West non-golf course homes - 5 month supply (last year 3.43)
Arizona Traditions golf course homes - 6 month supply (last year 7)
Arizona Tradition non-golf course homes - 8.5 month supply (last Year 6.14)
Corte Bella golf course homes - 4.5 month supply (last year 16.5)
Corte Bella non-golf course homes - 13 month supply (last year 15.16)
Trilogy @ Vistancia golf course homes - 6.33 month supply of resale homes (last year 16)
Trilogy @ Vistancia non-golf course homes - 7.75 month supply of resale homes (last year 6.71)
PebbleCreek golf course homes - 6.25 month supply of resale homes (last year 4.25)
PebbleCreek non-golf course homes - 11.75 month supply of resale homes (last year 7.5)
Sun City Festival golf course homes - hard to say - 3 on market, no sales last month
Sun City Festival non-golf course homes - 2.62 month supply of resale homes (no sales last year)
I should note that Trilogy @ Vistancia, PebbleCreek, and Sun City Festival are affected by the incentives the builders are giving for new construction. It is very difficult to compete with their "deals" and resale homes either have to be discounted heavily or they will sit on the market. It would appear the Sun City Festival sellers are pricing their homes to move them.
Corte Bella is still struggling with resale inventories that skyrocketed while Pulte was completing their sell-out of the community, offering unbelievable deals on the last of the new construction homes.
These figures are meant only to give you an idea of the market as it stands today, compared to last year. Because of the seasonality of our "snow-bird" market these figures vary widely from month to month.