The Philly Pretzel

What are absorption rates… and why are they the best indicators of Market Performance?

Absorption rate is the average number of homes sold per month over a particular period of time and how long it will take the homes that are on the market to sell. Absorption rates are a great means of tracking market performance and predicting trends. Although they are usually used to indicate overall market performance they can be just as powerful when tracking sales by price range or by neighborhood.

Buyers market, sellers market or neutral market?

The amount of inventory determines which way the market swings. A neutral market is 6 months of inventory and anything less than that is a sellers market. Conversely, an inventory of more than 6 months is a buyers market.

What do absorption rates mean to a buyer?

Absorption rates can help a buyer to understand market supply and demand and this can be helpful when crafting his/her offering strategy. The longer a home has been on the market and the more competition that it has in its price range, suggests a lower offering strategy and a greater possibility of increased reduction off asking price.

What do absorption rates mean to a seller?

Absorption rates help a seller understand how long it might take a home to sell. They can also assist the seller in determining their pricing strategy. The most desirable home in a price range always sells first. If a seller wants to sell quicker, they want to have the most desirable home in a price range… even if that is one price range lower.

Disclaimer:

Absorption rates are a great tool that can be used by either a buyer or seller to understand the real estate market and to be in a better position for success. But they tend to fluctuate dramatically by neighborhood and by price range. Absorption rates are more accurate if calculated in smaller segments. A good example is the rate for Fishtown is 6.23 weeks and the rate in Queen Village-Pennsport is 4.33 weeks but the above rate for all of Philadelphia is 11 months! If you would like to know the absorption rate for your neighborhood, send me an email and I will publish the rate.

Potentially Related Posts:
The State of Philadelphia Real Estate
Philadelphia Forclosure Rate

Technorati: Philadelphia real estate, absorption rate, Philadelphia real estate trends, market conditions

posted by janice

The tallest building in the Western Hemisphere and the second-tallest building in the world is planned for the parking lot at 18th and Arch Streets in Center City. Walnut Street Capital, a Philadelphia development company headed by Garrett Miller and a pension fund from Washington State are joining forces to develop the project. This type of funding enables the project to skit around the current credit crunch that is starting to put a damper on commercial projects. With the funding in place the obstacles ahead include the need for zoning adjustments and attracting prospective tenants to occupy the office part of the building.

This development would fill a hole in a critical block of Center City and help expand the Central Business District  filling the emptiness between Logan Square and Market Street. The design of the building will have a mix of uses and design elements that try to create vibrant public spaces to be used at all hours.

The American Commerce Center would be constructed to meet the U.S. Green Building Council’s LEED gold certification and the developer anticipates, if approvals are in place, breaking ground next summer and finishing it by 2012.

FAST FACTS:

     Website: American Commerce Center

     Location: 1800 Arch St.

     Height: Office Tower-1500 feet (525 feet higher than the Comcast Center)

     Usage: retail, hotel and office space (even a movie theater)

     Cost: $800 million, 2.2 million square feet

     Architect: Kohn Pedersen Fox

     Developer: Walnut Street Capital

     Groundbreaking: Summer 09′?

     Features:

        •  1500′ Spire
        •  26 Story Hotel / 5 Star (300 rooms)
        •  2 Roof Gardens (473′ and 6th Floor accessible to hotel guests)
        •  3-6 Stories of Ground Floor Retail along Arch St with a public garden
        •  Underground Parking (383 spots with dedicated bicycle parking)
        •  LEED Gold Certified

Impressive news. This is a great day for Philadelphia. Check out the official renderings and more information on philly skyline.

Technorati: Philadelphia skyscraper, Center City, American Commerce Center, tallest buildings, Philadelphia real estate

posted by janice

Here’s another reason to love Philadelphia: according to the City Planning Commission, daily off-street parking is both “ample” and “cheap.”
Occupancy rates are only about 80%, and availability should continue to cheerily rise with demand so not to worry, friends; when you need parking space for your 2010 Cadillac hybrid, it will be there.

Why doesn’t this cheer me right up?

Because as a Realtor, I’m always trolling for a short-term space, which the Commission admits is “disproportionately expensive” compared to other cities. Typically, an hour’s parking costs more than half as much as a full day.
Plus, it takes me a few precious milliseconds to drive into a parking lot.
What I want, dear reader, is a nice cheap parking space right smack at the curb.
But sometimes, even in my favorite city, you can’t always get what you want.

PS. You can pay your parking tickets online, it’s almost painless.

Technorati: Philadelphia, Center City, Philadelphia parking, parking problems

posted by carolyn

There is a style of house for everyone in Philly.

The log cabin sits at the corner of Lawrence and Popular Streets in the neighborhood of Northern Liberties. Built on four lots by artist Jeff Thomas in the 1980’s with a truckload of logs from West Virginia. Thomas’s inspiration for the home came from the “back to the land” movement of the 1970’s.

It is a two story cabin composed of one room on top of another with a steel chimney pipe rising up through the roof. The cabin is surrounded by a low stockade fence, stacks of firewood and a stand of walnut, locust and black cherry trees. Across Lawrence Street where once there was nothing but boarded-up buildings, expensive condos and rehabbed houses stand.

The cabin seems out of place until one remembers that in the 1980’s Northern Liberties was a remote section of the city, filled with abandoned row houses and factories. Most neighbors have come to accept the cabin and some love it. It stands today as a testimonial to the artists who first took over the buildings and established the area’s eclectic ambience.

Technorati: Northern Liberties, unusual houses, log cabins

posted by janice

By now, you’ve likely heard that mortgage delinquency and foreclosure rates are rising rapidly but Philadelphia foreclosures are far fewer. Foreclosures in the Philadelphia area dropped by 32 percent last year, according to RealtyTrac. The California company, which tracks foreclosures, released its Year-End 2007 Metropolitan Foreclosure Report, ranking the nation’s 100 largest metro areas by percentage of total households entering some stage of foreclosure. Philadelphia was 79th, with a foreclosure rate of 0.492 percent of households.

The scenario is not one of doom and gloom as buyers are out there and properties that show well and are priced correctly are moving. Days on market are down slightly at 67 days average for the month of February and should shorten as spring approaches.

Technorati: Philadelphia homes, foreclosure, mortgage

posted by janice