Well duh, Joe, we all know we need more homes to sell in Madison, WI. What's your point?
The current market gives me an excellent opportunity to explain the main indicator on what defines a buyer's market vs a seller's market.
This main indicator is called the absorption rate.
The absorption rate tells you how many months it would take to sell off all the homes that are currently on the market. The important word there is current. The absorption rate does not include any future homes that will hit the market, only the current one's.
If the absorption rate(AR) is 3 months or less, the market is under supplied and it's a seller's market.
If the AR is 4-8 months, the market is balanced and a normal market for homes to sell.
If the AR is 9 months or more, it's a over supplied and is a buyer's market.
So the question is, what is the current absorption rate in Madison, WI? To be fair I have to disclose that these stats include both condo's and single family homes.
So far this year, on average we have had 246 sales per month in Madison, WI. The current number of homes on the market is 2,553. So at 246 sales per month it would take 10.37 months to sell off the current inventory. So it is still a buyer's market in Madison, but not by much all things considering.
To put things in perspective Janesville, WI has 659 homes currently on the market and they are selling at a rate of 51 homes per month which puts their AR at almost 13 months (12.92). The spread between Madison and Janesville would probably be bigger if the Madison condo market wasn't included. That definitely increases the absorption rate for Madison.
In 2005 at this time of the year there were 431.55 sales on average per month in Madison, so at the current inventory we could sell off everything in less than 6 months, a balanced market.
So this shows us, yes things have swung here in Madison, but not as bad as some areas. If you are looking at buying, you obviously have a lot of choices out there. Go find one!!
Joe Marks
608-310-7355
joe@cooperspransy.com
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