What You Need to Know About Prices the Medfield MA Real Estate Market
In my last post, I shared an update on the Medfield MA real estate market as of February 29, 2016. It included the properties and prices of homes that sold in Medfield February.
This post focuses on information that Sellers and Buyers need to understand the impact of different types of real estate markets.
When the media speaks about real estate markets, it's often in very broad terms. You may hear that there's a "Seller's Market" or a "Buyer's Market". How are those markets determined and what does it really mean when it comes to selling your home?
First, Let's Look At Absorption Rate:
Absorption Rate is the term used to describes the number of months it will take to sell (or absorb) the current inventory of homes if no new homes are listed for sale in a particular real estate market. Absorption Rate is calculated by multiplying the number of homes currently for sale by the Rate of Home Sale in a particular time period. The Absorption Rate
Example: If 35 homes sold in the past 6 months (182 days), the Rate of Home Sales is 182 ÷ 35 = 5.2 days. That means homes are selling at the rate of one house every 5.2 days.
The Absorption Rate is calculated by multiplying the Rate of Home Sales by the number of homes currently for sale. Using the example above, if there are 85 homes currently for sale the Absorption Rate is 5.2 x 85 = 442 days. Now, divide this by 30 to calculate the number of months: 442 ÷ 30 = 14.73 months. This number would represent a strong Buyer's Market.
Types of Markets: Absorption Rate indicates the type of real estate market. There are 3 types: Seller's Market, Buyer's Market and Balanced Market.
In a Seller's Market, the current inventory of homes will sell in less than 5 months if no new homes are listed for sale. A Seller's Market indicates that the inventory of available homes for sale is low compared to Buyer demand. In this type of market, Buyers need to be ready to act quickly and may face multiple bid situations.
The opposite is true in a Buyer's Market. This generally occurs when there is more than 7 months of inventory. The inventory of homes for sale is high compared to Buyer demand. Buyers have more housing options to consider before making a decision to buy. Sellers must have their homes priced and marketed properly so their homes don't sit on the market. As an example, if it take 14 months to sell all of the homes on the market, at a rate of one home every 5.2 days, do you want your home to sell in the first 5 or 10 days or on the 400th day?
A Balanced Market is generally when there is between 5 to 7 months of inventory.
The Problem With an Overall Rating of a Real Estate Market:
You may hear talk of a "Seller's Market" or a "Buyer's Market" in a particular city, town or county. The problem is that not all of the homes in a particular market sell at the same rate. Homes sell at different rates for a number of reasons including price range. While it might be a Buyer's Market for homes in $700,000 price range, it might be a Seller's Market for homes priced in the $400,000 and $900,000.
As of March 8th, here's a look at the 2016 Medfield MA Real Estate Market Absorption Rate by Price Category:
The Medfield MA Real Estate Market represents a Seller's Market in almost every price categories. In some price ranges, it is a stronger Seller's Market than in others. Homes priced in the range of $500,000-$599,999 are selling at a rate of 1 home every 16.5 days.
This is a great time to sell your home in Medfield MA. If you are thinking of selling, it's important to know that even in a Seller's Market there is still a market value and you'll want a REALTOR® who can help you price your home correctly and market it to the broadest possible audience.
If you are thinking of selling your home in Medfield, Dover, Westwood, Walpole, Sharon, Canton or Norwood call me at 781-883-3764 so I can provide you with a market analysis of your home. I am 100% dedicated to you as your REALTOR®.
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