If I tell you the price you want to hear I will get your listing, but will I earn your business and will I be able to get your home sold?
Here’s how I find the absorption rate:
1st I determine the number of homes closed in your market over a specific period – say, 6 months. I get this data from the MLS.
2nd I divide the number of homes by the number of months in the period – in this case, 6. This calculation gives a per month absorption rate.
Last I divide that rate into the number of current listings. This yields the months’ supply of homes.
Six months’ supply is considered a balanced market – when the number of listings roughly equals the number of buyers. if there is over a six month supply that represents a buyers’ market and below that a sellers’ market.
To assess sales trends (which way is the market going?), I calculate supply over longer periods (twelve-months) and over shorter (three-month) periods. Price in real estate is mostly a matter of supply and demand and what a buyer is willing to pay.
Every neighborhood is different and there can be huge variation in the same neighborhood but different price range. It’s important to have all the information you need to price your homes to sell. And its important to have an agent who understands the market and can give you the information that you need.
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