These are crazy charts.
Absorption rate is a term used in real estate to describe the speed homes are sold in a specific market in a specific time frame. It’s determined by dividing the number of homes sold by the number of available homes within the same time frame.
A 100% absorption rate for the month means that the same number of homes that were for sale that month sold that month.
On these charts you can see that from late 2020 until early 2022 the Absorption Rate in El Dorado Hills was over 100%, For some month it was over 200%!
The 200% Absorption Rate happened when homes were taking an average of 13 days to sell. Buyers could not find homes to buy and when they did, there were more buyers than houses, driving bidding wars and all the craziness those years brought us.
Today the Absorption Rate is in the 35% range. This means that 35% of homes for sale will sell in a month. Another way to look at this is that, on average, a home will take about 3 months to sell.
Sellers wanting to sell in 30 days need make sure that their home is among the 35% most attractive buys in that month. Of course buyers will factor in price point, neighborhood, age of home, updates, amenities, and more.
Savvy sellers will take into account the knowledge that active buyers have already seen everything on the market. Sellers have a short window to entice active buyers who have not been able to find the home they want.
This is why it is always important for sellers to come on the market with their best foot forward.
We will help you do this!
Buyers can also take advantage by educating themselves on the current Absorption Rates. If you find a home you love when it first comes on the market, there’s currently a 35% chance it will sell the first month. A home on the market for over 30-days means that 35% of buyers preferred a different house. And a home on the market over 60-days means that there might be an opportunity for a buyer to be more aggressive when writing an offer.
We will help you do this, too!
As the market has slowed, it has become more important than ever that buyers and sellers understand the current market dynamics and how they should factor into your sales and purchase strategies.
If you have questions about how best buyer and sell in this changing market (you should!), we are here to answer them.
Give us a call or send us a message and let’s help you make the best decision for your family!