What is the Absorption Rate for Lake Monticello?
Hint: this does not have anything to do with how long it would take to drain or fill Lake Monticello.
When it comes to real estate – Absorption Rate is the calculation used to determine how long it would take for all of the homes on the market to sell, if no other homes entered the market at any one given time.
Based upon my calculations, as of 11/18/2014 – It would take until JUNE 24th, 2015 for all of the homes that are currently listed for sale in Lake Monticello to be completely sold and change the inventory to ZERO.
218.03 Days to be precise.
Here are the assumptions that go into this calculation.
First – the currently inventory active for sale along with the homes currently under contract with contingencies and those pending for sale. This number changes on a daily to weekly basis. New Homes are added to the market, other homes are either taken off the market because the owner changed their mind about selling or they had trouble selling.
= Active Listings + Under Contract Listings Minus Solds and Removed from Market / Failed to Sell
Then we have to determine how many homes have sold per month. I have included 3 numbers to that you can see the trends of the market and also see the numbers that I use to come up with the Inventory “Closeout” Date.
– The first number is the number of homes that sold LAST MONTH. This number can vary from month to month. In 2014 – the number has varied from a high of 23 to a low of 14 in August. Because of this variance, I do not use this number for the actual calculation.
– The second number is the average of the number of sales that have occurred per month for the entire year of 2014. I usually make sure that this number includes between the last 6 and 12 months of data to incorporate and market trends and seasonality. This is the number that I used to get to June 24th.
– The 3rd Number is from The Choice Homes Team Historical Data Tracking back to 2007. It is included as a comparison so that you can see what the long term historical trend has been for Lake Monticello. Historically, the trend has been to have 7.86 Months of Inventory at any given time because the market has sold 16.93 homes on average per month since 2007.
So – 133 Homes Divided by 18.3 Average sales per month Times 30 days = 218.03 Days added to 11/18/2014 = 6/24/2015. Easy as Pi.
So – What does all of this mean and why do I even track this information? – Great Question. Because I am constantly asked: HOW IS THE MARKET?
Having the Absorption Rate Data and Months Inventory Calculation will help us determine if Lake Monticello is in a Buyer’s Market, a Seller’s Market or a Balanced Market.
Here is the real estate industry accepted guide:
0-4 months is a “Seller’s Market”
5-7 months is a “Balanced Market”
8-12 or more is a “Buyer’s Market”
So, at 7.27 – 8.31 – you can see that Lake Monticello is right on the edge of a Balanced Market to a Buyer’s Market. Buyer’s have options right now. 102 Active Home Options right now – just in the Lake. And with only 16-18.3 of these homes selling in any one given month, they do not have to feel as much urgency as they would if say 30-40 of the 100 homes were selling each month.
Sellers that decide to venture into the market need to put their best foot forward with regards to price and condition of the property. If they don’t – then buyer’s have options and they will move right along to the next property. That is the trends that we can see from the Absorption Rate Data and Months Inventory Calculation.
So, If you ask and agent about the market conditions, and they say it is great or that it is slow and they don’t give you the reasoning behind the answer, then it may be time to make the CHOICE to find another agent.
If you would like to know how this information may impact your next home purchase or home sale – give me a call at 434-922-0011 and we can discuss this further.
Lake Monticello Choices: Lake Monticello Homes for Sale – Golf Course – Lots & Land – New Listings – Pool – Fireplace – Reduced – Open Houses
Bedrooms: 2 – 3 – 4 – 5 or more
Price Ranges: to 149, 150-199, 200-249, 250-299, 300-349, 350-399, 400-499, 500 +
Year Built: 1970s, 1980s, 1990s, 2000s, 2010+
I also shared that the Lake Monticello Real Estate market stays robust during the winter months in my posting: Should be wait until the Spring to Sell our Lake Monticello Home?
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