If you've been keeping an eye on the "Market Conditions" page of my web site you probably know that it's my read that the Mountain Home real estate market is in "pretty good" shape at the moment. However, much as I hate to, I recognize that there are a few hard cases out there that like more than me waving my hands vaguely in the air.
If its numbers you want then absorption analysis is what you need. Absorption analysis projects, by market segment, how quickly the current inventory of homes will sell (i.e. be absorbed) based on the current level of activity in the same market segment.
The table below compares sales over the past 90 days (the small size of the Mountain Home market prevents using shorter periods) with the number of homes currently on the market. Based on this, it appears that the only price ranges in significant oversupply are the under $75,000 and the over $325,000, both with 21 month inventories. The small samples sizes certainly don't enhance reliability but the results but are still better than a grunt and a guess.
Price Range | # Sold | Sold/Month | # On Market | Months to Sell |
<75000> | 1 | 0.3 | 7 | 21.0 |
75000-99999 | 11 | 3.7 | 12 | 3.3 |
100000-124999 | 8 | 2.7 | 9 | 3.4 |
125000-149999 | 16 | 5.3 | 20 | 3.8 |
150000-174999 | 29 | 9.7 | 48 | 5.0 |
175000-199999 | 25 | 8.3 | 40 | 4.8 |
200000-224999 | 7 | 2.3 | 15 | 6.4 |
225000-249999 | 7 | 2.3 | 18 | 7.7 |
250000-274999 | 2 | 0.7 | 10 | 2.5 |
275000-299999 | 3 | 1.0 | 6 | 6.0 |
300000-324999 | 2 | 0.7 | 3 | 4.5 |
>325000 | 3 | 1.0 | 21 | 21.0 |
In addition to indicating the overall health of the market, absorption analysis can be useful in pricing a home. For example, if homes if homes in one price range are taking 8 months to sell while those in the next lower range need only 4 months, dropping into that faster moving segment might be worth considering.
Another way of using absorption analysis to see what's hot and what's not is by segmenting the market by the age of the home instead of it's price. I'll strap that project on next month after my head stops hurting from this one.
Note: Historically, markets are considered to be "neutral" or in balance when homes take about 6 months to sell. "Buyer's Markets" are those with sales times exceeding 6 months and a "Seller's Market" exists when marketing time is less than 6 months.
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