Do you know your absorption rate, and why you should care?

By
Real Estate Agent with Keller Williams Realty Coeur d'Alene AB37665

Absorption Rates are
all about supply and demand.

Absorption rates vary widely from town to town and neighborhood to neighborhood, and also from price range to price range within those communities. If you are trying to sell your house, or even if you're in the market to buy, one of the pieces of information that should be factored into your pricing or offer strategy is the absorption rate for homes in your specific community and PRICE RANGE.

Do you know your absorption Rate?

An absorption rate will tell you, based on current market activity, how many months, or even years, it should take to get your house sold in our current market, at a particular price. The formula is really very simple if you have the statistical info that you need.

Coeur d'Alene absorption ratesLet's say you have a home to sell for $250,000. And let's say that there were 40 homes that sold for $250,000 in the past year. Currently there are 10 competing $250,000 homes. It's easy to see that with 40 sales a year, and 10 homes on the market, it should take 3 months (1/4 of a year) for the market to naturally absorb the existing inventory of $250,000 homes. The absorption rate would be 3 months for $250,000 homes in your community.

Absorption rates vary widely by price range. It's quite an eye-opening statistic. And it shows us that locally it really depends on price range whether it's a buyers market or a sellers market. A six months inventory of homes is generally considered to be a balanced market. More homes than that would make for a Buyers market, fewer would make for a Sellers market.

I have absorption rates for Coeur d'Alene, Post Falls, Hayden, Rathdrum, Spirit Lake, Silver Valley and Sandpoint. Also broken down for condos, multi-family, waterfront and properties over $1M. Call me if you would like to find out YOUR absorption rate! The more competitive your niche in the market, the more competitive you will need to be in pricing, condition, staging and marketing.

According to the statistics compiled at the end of January 2019 in the Coeur d'Alene MLS, it is a definite Seller's market in all price ranges below $350,000. It's a balanced market between $350,000 and $500,000. It's a strong buyer's market in all price ranges above $500,000.

 

Knowledge is power, and anything you can do to give yourself a competitive edge will payoff in spades!

 

Rick and Janna Scharf

Posted by

Janna Rankin Scharf provides a superior level of real estate service to home buyers and sellers in Coeur d'Alene and Kootenai County, Idaho. Visit www.JannaScharf.com for area information and to search for all homes in the Coeur d'Alene Multiple Listing Service. 

No matter how grand or modest your real estate dreams may be, you can turn to me in confidence.  Give me a call today so I can  be of service to you!

Janna Rankin Scharf AB, GRI, CLHMS, PMN, SFR  208.651.9700

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Rainmaker
3,978,945
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

People sometimes get so caught up in the wrong numbers. I look only at productivity 

Feb 12, 2019 04:43 PM #1
Rainmaker
1,873,814
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Janna - that is an excellent explanation and when it is explained that way people will understand their own situation instead of picking up hearsay.

Feb 13, 2019 05:40 AM #2
Rainmaker
2,497,466
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

Understanding absorption rate is an important factor in knowing the market we are dwelling in.  Great topic, Janna!

Feb 15, 2019 01:55 PM #3
Rainmaker
1,822,837
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Now that the market is starting to Shift , I'll need to dust this off to get Sellers to "Price Ahead of the Market"

Feb 27, 2019 03:40 PM #4
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