Buyer or Sellers Market? Absorption Rates for October 2008

There’s nothing so exciting as watching the latest figures on how quickly homes are selling in Fayetteville!  Okay, almost everything is more exciting, but the latest absorption rate figures are available, and they paint a picture of a market that continues to slow.

In my page about Fayetteville Real Estate Market Information, I explain that absorption rates are a way of showing how quickly homes are selling.  This chart shows, based on sales over the last 12 months, how many months inventory there are for homes in each price range.  Take a look at the following table:

Absorption Rates November 2008 - Existing Home Sales

Price	# of Active Listings	# Closed in the Last 12 Months	12 Month Average Closed per Month	Available # of Months Supply
<$74,999	465	962	80.17	5.80
$75,000-100,000	374	768	64.00	5.84
$100,001-125,000	287	825	68.75	4.17
$125,001-150,000	344	759	63.25	5.44
$150,001-175,000	248	472	39.33	6.31
$175,001-200,000	185	307	25.58	7.23
$200,001-225,000	131	191	15.92	8.23
$225,001-250,000	135	117	9.75	13.85
$250,001-350,000	229	208	17.33	13.21
$350,001-399,999	53	35	2.92	18.17
$400.000-499,999	53	32	2.67	19.88
$500,000-749,999	45	14	1.17	38.57
$750,000-999,999	20	1	0.08	240.00
>$1,000,000	9	1	0.08	108.00
totals	2,578	4,692	391.00	6.59

Here’s the bad news (if you are a real estate agent or a home seller.)  Right now, in every price range over $150,001 there is more than a 6 month supply of houses on the market, and for price ranges over $225,001 there is over a year supply.  For price ranges below $150,000 there is a 5 month supply on the market.  By most expert opinion, this data suggests we are in a buyers market and it certainly shows that the market in Fayetteville is much more sluggish than usual.

But, statistics can be misleading, and here are a few facts to consider:

• absorption rates are a lagging indicator of market activity–they look back over the last 12 month period, not forward;
• houses do not sell in the order they come on the market.  The fairly priced house, that is well maintained and in a good location will sell more quickly than other houses, and it will have more buyers interested in it;
• 67% of the houses for sale in Fayetteville are priced under $175,000 and those price ranges sell more quickly, even if there are more houses available.

Additionally, if we compare the number of houses on the market to the last report, there are more homes for sale in the lower price ranges than last time, and fewer homes for sale in price ranges above $175,001.  This indicates that some sellers may be waiting for conditions to improve before they list their house for sale.

Okay, so what does this mean to you?

• If you are considering selling your home, or if you already have your home on the market, you will have to make sure your home is priced right and in good condition if you want to sell it quickly.  Good marketing, including proper maintenance and staging of your property will make a difference.
• If you are a buyer in the market for a home right now, you will have a good selection of homes available, and sellers may be willing to deal more than they normally would.  In the Fayetteville market, it is not at all unusual for sellers to contribute to a buyer’s closing expenses, and if you are planning to use a VA loan to purchase your home you may be able to buy a home with very little out-of-pocket expense.
• If you are an investor, there are good properties available.  Anecdotally, the rental market in Fayetteville has improved appreciably.  Houses seem to be renting faster–it may be that more people are choosing to rent over buy while they wait for economic conditions to improve.

Selling or buying a home right now requires a little patience and an experienced broker if you are hoping to make the best of market conditions.  Please email me or call me if you want some advice or are unsure of the best way to proceed.   You can still meet your objectives for buying or selling even in the current market.