Absorption rate is the speed at which the homes that are for sale are being absorbed by the market. If it take an average house 7 months to sell that is called an absorption rate of 7 months.
Most real estate industry analysts look at the absorption rate to get a feel for the market. When people are talking about a “sellers” or “buyers” market they usually use an absorption rate of 6 months as the dividing line.
Here are the absorption rates for Wasilla and Palmer.
|Residential Properties On The Market
|Pending Sales Last Month
|Absorption Rate # Of Months It Will Take To Sell
|$200,000 and below
|$200,001 to $300,000
|$300,001 to $400,000
|$400,001 to $2,000,000
This is helpful for both buyers and sellers. If you are a buyer in a screaming sellers market where it might only take 1 month to sell the average house you know you better make your decision quickly and not try to bargain much when you want a property. You better grab it quickly. A seller in a buyer market must value any offer like gold because the buyer has lots of other choices and could walk away for a different house if the seller is too stubborn with his price.
Taking a look at the Wasilla and Palmer real estate markets you can see that we are fairly close to the center. It is a slight sellers market under $200,000 and a slight buyers market over $200,000. When you get over $400,000 it becomes more of a solid buyers market.
There is somewhat of a misconception by most buyers right now that they are completely in the drivers seat and many are missing out on houses that they really want because of this. Some places in the country are solid buyers markets with absorption rates longer than 2 years. The media plays this up so that people think the buyers market is universal. Obviously, looking at the numbers above, this isn’t so. We are in a slight sellers market for prices between $200,000-$400,000. If you are under $200,000 you are competing in a slight sellers market.
Make your decisions accordingly.
This representation is based in whole or in part on data supplied by, and to, the subscribers of Alaska Multiple Listing Service, Inc. (AK MLS, Inc.). AK MLS, Inc. does not guarantee nor is it in any way responsible for its accuracy. Data maintained by AK MLS, Inc. is for its own use and may not reflect all real estate activity in the market.