Statistics for King County: Absorption Rate April 2008
The graph above gives a dramatic picture of the current real estate market in King County. What it shows is the relationship between active listings and those properties that are “pending sales.” (pending sales are those properties that are either being inspected or on their way to closing) You will note that there were 15,359 active listings in April with 2419 pending sales. “So what?” Well, the ratio between the numbers is called the absorption rate which is the percentage of homes that are selling in a given period of time. Take a look at the chart below:
15.8% of the homes listed in April went pending or were “absorbed” by the market. This means that there was almost 7 months of inventory on the market in April. So what does this mean to home owners who want to enter this market or those who want to purchase a home? A few things:
1) If you intend to put your home on the market in this market, make sure you have a firm grasp on reality. Your competition is huge today in most neighborhoods. There are currently 192 active listings in Kenmore. Days-on-market have reached an average of 4 months! You must be willing to spend some money to prepare your house for sale. For example: dress your home for success (which may involve spending money on new paint, staging, landscaping, etc.). You’ll also want to find an agent who knows YOUR LOCAL market and who has experience in listing homes.
2) If you intend to purchase a home today there are a huge number of opportunities to negotiate (in a kind and caring way!) concessions that were unavailable just last year. It’s not uncommon to find sellers willing to give concessions on closing costs or to be more “understanding” when you ask for repairs. I highly recommend that you consult with a lender to explore your options.
I hope this “Cliff’s Notes” version of absorption rates helps you better understand what we realtors drive ourselves (and our spouses) crazy about when we examine the market.
