Fairbanks Alaska Absorption Rates June 2008

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Real Estate Broker/Owner with Jesse Clifton & Associates, REALTORS® AREC License #15292
Fairbanks Absorption Rates for June 2008
By: Jesse Clifton; Fairbanks Real Estate Broker

Fairbanks Homes For Sale One of the most important yet often overlooked keys in setting an asking price for a home is the absorption rate. It's as important to pay attention to these numbers as it is to the most recent closed sales in a particular neighborhood.

Simply stated the absorption rate is the rate at which homes are selling. By dividing the number of available homes by the number of homes sold during the previous 30 days we're able to see how long it will take the market to absorb the current inventory of homes for sale.

Keep in mind this number is not static. The absorption rate changes every time a new listing hits the market or a home in escrow closes. The rates below are a snapshot of the market today.

Looking at what similar homes have sold for and making the requisite adjustments for age, size, amenities, etc. is critical to establishing market value. While the recent sales will give you the initial value, it's just as important to see how quickly the market is moving in order to solidify that value.

A Fairbanks home with a market value of $260,000 falls into the group of homes with an absorption rate of 9.1 months. At 5.4 months, homes in the $200,000 - $250,000 category are selling at a significantly faster pace.

Do the math. Assuming a typical mortgage payment of $2,200+/- (PITI) and average monthly utility costs of $300 (summer) and those additional four months of marketing time will cost you $10,000. Factor in average heating costs of $600 - $1,000 per month and it would be a very smart move to drop your initial asking price by $10,000 to move your home into a segment of the market that's selling much faster. After all time equals money and the longer a home sits on the market the more shop worn it becomes.

For sellers, the one caveat to the scenario above is that to get the most mileage out of these absorption rates, the home needs to be priced at market value as indicated by recent closed sales. If your market value is $250,000 but your asking price is $275,000 then you've easily doubled your marketing time and these numbers will be meaningless. Conversely if you’ve under priced your home then you can expect a much shorter marketing window.

Fairbanks Absorption Rates

Fairbanks

0-150K 58 - 15 = 3.9
150-200K 71 - 18 = 3.9
200-250K 81 - 15 = 5.4
250-300K 64 - 7 = 9.1
300-350K 30 - 3 = 10.0
350-400K 25 - 2 = 12.5
400K+ 27 - 1 = 27.0

North Pole

0-150K 31 - 3 = 10.3
150-200K 56 - 10 = 5.6
200-250K 86 - 18 = 4.8
250-300K 61 - 8 = 7.6
300-350K 15 - 1 = 15
350-400K 10 - 1 = 10.0
400K+ 4 - 1 = 4.0

Are you ready to sell and need to know the current market value of your home? Call us at 907-699-6024 or contact us online and request a comparative market analysis.


Jesse and Kathy Clifton Fairbanks Real Estate Professionals Thinking about buying or selling real estate in Fairbanks or Interior Alaska? We know Fairbanks real estate – Think of us as your local experts.

Search Fairbanks homes for sale, sign up for free new listing notifications, view Fairbanks market statistics or browse our virtual relocation package.

Have questions? Contact us online or call us at (907) 699-6024. We would love to hear from you.

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Rainer
138,335
Melody Botting
Broker Associate PenFed Realty - San Antonio, TX
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Good information.  Thank you for posting.

Jun 13, 2008 07:58 AM #1
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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Jesse, the absorption rates in general increase with price range but your market looks overall fairly healthy to me.

Jun 13, 2008 09:57 AM #2
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Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
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Mel - It was good to talk to you today.... give us an update when you get a chance!

Gary - Agreed.  It's much slower than it was but relative to some markets it's moving along quite well.

Jun 13, 2008 10:06 AM #3
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

Jesse:  I just had a listing appt yesterday that I told the Sellers their absorption rate in their area/price range and they nearly fainted!  In their market, we have a 22+ month supply and they truly didn't want to hear that!  I explained to them that they could go in month one but, I just needed to stress the importance of pricing their home correctly--TO SELL!

Debe in Charlotte 

Jun 13, 2008 10:19 AM #4
Rainmaker
317,819
Monika McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Hampstead, NH
Southern NH & the Seacoast Area

I use the absorpution rate to get a longer listing term as well as a lower price.

If it takes 9 months to sell, why take a 6 month listing.

Jun 13, 2008 11:37 AM #5
Rainmaker
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Don Rogers
Keller Williams Realty Chesterfield - O'Fallon, MO
Realtor, Broker, CDPE, GRI, OnullFallon MO & St Charles County MO homes

Jesse,

Thanks for the post I know that there are several folks that have ask how to determine it.  I am going to start looking at the different price ranges myself.

Don R.

Jun 13, 2008 12:14 PM #6
Rainmaker
560,417
Jo Olson
HOMEFRONT Realty - Kettle Falls, WA
Retired - HOMEFRONT Realty @ LAKE Roosevelt

Jesse, I so need to do my May figures!! I love doing the research for absorption rates and they really are a great way to talk to sellers! Great examples you used.

Jun 13, 2008 12:36 PM #7
Rainmaker
556,049
Lynda Eisenmann
Preferred Home Brokers - Brea, CA
Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co

Jesse,

Hum, I was just commenting and it disappeared, not sure if this will show up 2x or not?

Anyway, great info for Fairbanks homes sellers. As usual you're right on top of things in your marketplace.

We have something similar in So Cal, our MLS contracts with a company who provides us with similar reports monthly for 32 cities in our area. They are broken down in the different price ranges similar to yours. Not sure how many area Realtors here use them, yet I find the information invaluable for savvy home sellers.

Jun 13, 2008 02:04 PM #8
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TeamCHI - Complete Home Inspections, Inc.
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Jessee, I think that you need to send Guito and his buds to talk to some of these sellers and Persuade and talk some sense into their heads -- if you know what I mean...  Have a great weekend!

Jun 13, 2008 09:39 PM #9
Rainmaker
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Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

You explained that very well, Jesse. We call it "inventory" in Sacramento, but same thing. I also use the average DOM for sellers and just ran the numbers last night for a client, showing he can increase his odds of a faster sale by lowering the price or wait out the 90 days it is likely to take to move it. As agents, we can do everything humanely possible on our end to move inventory, but all the marketing efforts, virtual tours, open houses, agent networking and Internet exposure isn't going to sell a listing if it's not priced right.

A reader wrote to me the other day to say all agents want to do is lower the price, and he believed agents should be better sales people. In part, I agree, agents do need to sell, and some forget they are salespeople. But we're not Monty Hall. That approach won't sell a home. Price will win every time.

elizabeth weintraub real estate agent Sacramento

Jun 14, 2008 11:13 AM #10
Rainmaker
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Colleen Fischesser Northwest Property Shop
RE/MAX Advantage | Managing Broker - Chelan, WA
A Tradition of Trust in the Pacific NW since 1990!

I think it's interesting to see the comparison by price range. I rarely post absorption rates, but use them frequently in presentations. I think it's powerful information and may just copy the idea for my market :-)

Jun 15, 2008 02:28 PM #11
Rainmaker
649,514
Susan Mangigian
RE/MAX Preferred, West Chester, PA, RS152252A - West Chester, PA
Chester & Delaware County Homes, Delaware and Ches

Are you too busy selling real estate to check in with your friends Darlin?

Jun 16, 2008 01:56 PM #12
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Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Good info, thanks Jesse.  Monika's point, 9 month absorption rate = 9 months listing, good one!

Jun 17, 2008 07:45 PM #13
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Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
Retired

Debe - No, they never want to hear it but they need to, don't they? Now, go sell that sucker! :)

Monika - Exactly! I'm not about to expend all that energy and not get a listing that matches the anticipated marketing time.

Don - Thanks for stopping. It's interesting to see how different markets are performing.

Jo - Sellers love this stuff... I'm behind on a couple of reports as well... but it's summer! haha

Lynda - Seems like the smart folks are paying attention to this stuff, which is good because our buyers and sellers need to know. Our stats are compiled by our AE and are very basic. I track the market the hard way but would love to have access to thorough one touch stats.

Michael - Guito and his buddies are on speed dial.  It helps to know folks in low places.

Elizabeth - There are quite a few that have forgotten or simply never learned to selll in what was a screaming hot market but it still boils down to price.

Colleen - I typically run them with my monthly and quarterly market reports but I've been behind a little getting those done... it's good to be busy, right?! :)

Susan - I know... I know... I've been slacking lately. All work and no play makes for a dull boy, right? Now, where's the wine?

Virginia - Thanks... the numbers are good for everyone to know... buyers, sellers and us as agents.

Jun 17, 2008 09:07 PM #14
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