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A Buyer's Market or A Seller's Market? Absorption Rate as a Measure

Shanahan Real Estate Group's June O'Keefe Burt offers her perspective on the market today and how to use absorption rate as an indicator of buyer and seller activity. Thanks, June!

We at Shanahan Real Estate Group wish to personally extend our best wishes to you for 2012. On the business side, we thought it would prove helpful, if you are considering buying or selling a home in 2012, to present some data that will clearly show the state of the market in our area. Real Estate is governed by the law of supply and demand; as such it is helpful to put a metric in place to judge the level of sales activity. The ABSORPTION RATE compares how many homes are for sale (the supply) to how many homes sold that month (the demand). We can then determine how many months it would take for all the homes currently listed for sale to sell at the current pace of sales. A balanced market is one that has anywhere between 2-4 months of inventory. Anything over 4 would favor buyers (more selection) and anything less than 2 would favor sellers(less options for the buyers). The numbers for the last six months in Winchester single family sales indicate an absorption rate of 3 months. Taken independently, this number is an extremely positive statistic for Winchester single family sales. From a sellers standpoint, this indicates that there is a qualified buyer pool for a well -priced home for sale. From a buyers standpoint, it indicates a balanced activity level and alleviates concerns of overpaying for a home in our current market. We anticipate as the spring market gets rolling, there will be increased levels of inventory, however, as anyone who has purchased a home in any spring market will tell you, there is an increased buyer pool as well. Winchester continues to outperform the market, even in these uncertain times. Happy 2012!

June O'Keefe Burt of Shanahan Real Estate Group

June O'Keefe Burt of Shanahan Real Estate Group

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