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Absorption Rates

Posted by Geordie Romer on May 27, 2006

What is an absorption rate? It is the average number of houses that sell per month and it tells us what kind of inventory we have.
I ran some numbers today which confirm what I thought was the case. Currently there are 57 single family homes (not including condos or manufactured homes) in the general Leavenworth market. This includes Plain, Peshastin, and Lake Wenatchee. The average home is listed at $536,000. From the buyers I talk to and e-mail day in and day out, this is out of most folks price range. For 2006 so far this year, the average sold price is $310,000.
From these numbers, you might guess that high price homes stay on the market and more reasonable homes sell quicker.
You would be right.
There is currently a 2.4 month supply of homes between $150,000 and $350,000. These are the homes most of my clients are searching for. If you are trying to sell a home in this market, the odds are in your favor.
Between $350 and 450,000 there is a 5.69 month supply. A little longer wait, but you’re likely to sell this summer if the house is priced competitively and shows well.
But wait, Geordie. You said the average home is listed at more than $500,000! We haven’t gotten there yet.
For homes listed at above $450,000 (there are 27) the absorption rate is much smaller. We currently have 10.8 months of supply. I would guess that we could tease some more info out of this if we needed to. My guess? The absorption rate for waterfront homes is much higher than for non-waterfront homes in the higher prices.
What is the overall message here? Even in a healthy market, there are segments of the market that are more friendly to sellers (under $300,000) and there are segments that favor buyers (over $450,000).

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    If you’re planning to buy a home in this area, the best place to start is with the Leavenworth Home Buyer’s Guide.

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