Absorption Rates

Hello all,

"Absorption Rates"

As everyone knows we have a serious issue when it comes to inventory levels through out the area. We had a steady climb in both offices at the beginning of the year but since we peaked our inventory is down about 20%. We are entering the summer  slow down so I do not think it will change in the next month and a half, however we need to keep a close eye on this for the second half of the year. One of the best ways to monitor movement in particular areas is with Absorption Rates, it can also be a very useful toll while working with buyers and sellers. Here is a reminder on how to calculate them.

20874 (Zip Code)

643 (prior 12 months sales)

643/12 = 54 (prior 12 month sales divided by 12 gets the sales per month)

135 (active listings)

135/54 = 2.5 (active listings divided by the sales per month)

2.5 Months of Inventory (if nothing else were to come on the market we would be out of houses in 2.5 months)

20854

518

518/12 = 43

246

246/43 = 5.7

5.7 Months of Inventory

Obviously this shows the inventory issue is much more severe in the lower end, 6 months of inventory is considered to be a balanced market between buyers and sellers. 

Enjoy the coffee,

Joe           

 

INSPIRATION FOR TODAY:

"When roadblocks, locked gates, and unexpected turns sprout up along the path we've mapped out, we can quit on the spot and progress no further. Or, we can build a new path and follow it in whatever direction our imagination takes us. For those who dream, the choice is simple." 
~ from Country Living magazine

A NEW DIRECTION!

So . . . you've done all those things the greatest minds have suggested - you've planned your life's objectives and created a career/life/family path, and have no doubt where it will lead you. You're on your own "Yellow Brick Road" to happiness and prosperity until . . . ZAP! . . . there appears a sign on the path that reads, "Road Closed."

You peer past the sign to determine the road condition. It looks OK, so you veer around the sign and continue. The road turns to gravel, then dirt, then narrows to a walking path. You leave the car, and continue on foot. Soon your arms are scratched by briars, you begin to tire, and the path abruptly ends at a sheer 200' cliff. Your trip is over. There are no more "yellow bricks" to follow. What now?

If you've ever come to the end of such a road in your life, you well know the sinking feeling that came over you. No matter how much you felt like giving up, the situation was no doubt resolved by creating a new road, a new path leading in an entirely different direction.

You may have had to hack at the briars, trim back the trees, and even bulldoze your way in a new direction. It may have taken time, with compass and hiking shoes, to blaze that new trail. It may have been exhausting work, but in the end you reached your destination.

You have two choices when faced with a roadblock. You can quit, or you can put your imagination to work finding an alternate route. In the words of Sir Winston Churchill "Never give up. Never give up."