Knowing the Rate of Absorption also indicated by months of Inventory is a helpful indicator of the Real Estate Market. Is it a “buyers” market, with inventory levels exceeding 7 months. OR is it a “sellers” market with inventory levels under 6 months which is equivalent to homes selling faster than hot cakes at McDonalds. We all know how many hot cakes McDonalds sell in a day. Rate of Absorption helps both the home owner and the home buyer. You see months of inventory while are very local in nature. Lee County Inventory levels for the past 12 months have been under 3 months…That’s a sellers market if I have ever seen one!!! Yet, in the $600,000 or above market of Water Front Homes in the South Cape the Rate of Absorption are in excess of 11 months….
What does it mean if the Months of Inventory or Rate of Absorption for Water Front Homes is over 11 months? The biggest nugget of info from this a seller would want to gain is PRICE..A home priced at the lower end of the competition will sell quicker than one that is “over-priced.” If average homes are selling for $275 sqft and there are 1o homes listed at $290 sqft…well if you want to sell your home in the next 60 days it would be wise to list it under $280 sqft.
If you are a buyer in this $600,000 price range looking for a beautiful Waterfront Home and you see the indicators are in your favor…THEN, you may have some leverage on the price or terms or the contract. It doesn’t mean you can buy the house for $100 grand less, it means you might be able to save $20,000 – $30,000. Even that is a substantial savings. Another thing to consider is terms, the seller may be more flexible on closing dates, payment of HOA fees, Credits on Repairs, ect…
The point is knowing the Rate of Absorption is a critical messurement for both buyers and sellers. If your realtor doesn’t talk about Months of Inventory or Rate of Absorption, as TRUMP would say, “YOU’RE FIRED.” And hire a quality agent such as Justin Ruzicka your HOUSEGUY in Fort Myers.