One
of the first things I discuss with prospective sellers is the idea that there
is a certain absorption rate that must be considered when looking at a market
in which to list a home. In essence, absorption rate is a tool used to
evaluate the supply and demand of the currently available homes on the market.
The reason this has an impact of your home’s selling success is clearly because
it will show a correlation as to how much in demand your home may be in that
neighborhood and how quickly other similar homes are selling.
To
understand this further, I have broken down our areas of coverage (Rancho
Mirage, Palm Desert, Indian Wells and La Quinta) into price points and
explained each as follows:
Median
Price Point of Up To $500,000
At
just 4.2 months of inventory on hand, up from a very low supply of 2.9 months
in May of this year – we are seeing homes in this price range selling very fast
particularly when they are priced right or even priced slightly above recently
sold values. Depending on your motivation level to sell your home, it could
take that much time (4.2 months) to sell but it is critical to price your home
appropriately.
$500,000-$1,000,000
Price Range
There
is a significant difference in inventory levels with this mid-level price point
and it shows in the 11.9 months of supply currently on hand. This number is
down from just a year ago when the number of available homes in this range on
the market was 14.9 months worth. In other words, if no new homes were to come
on the market in that time frame it would take 14.9 months for all those homes
to sell assuming market conditions remained the same. In this case, pricing
below the market may be needed to get your home sold quickly but for the most
part it is important to remain patient with the market.
$1,000,000-
$1.5M
This
price bracket of homes presents a greater challenge since there are currently
over a year and a half worth of homes on the market, up barely from a year
prior. Since homes in this market are moving at a snail’s pace it is important
to identify your motivation level and if the need to sell quickly is there then
you may need to price very aggressively and be willing to adapt to the market.
Lowering your expectations is key to selling success for homes in this price
range today.
$1.5M
and Up
The
luxury home market traditionally has a very slow absorption rate and this year
is no exception. With a five-year supply last year and a 20% improvement to
just 4 years worth of available homes this year, things are selling in this
market but very slowly. The hit and miss results can be very discouraging but
it is important to keep in mind that once again aggressive pricing strategies
and the willingness to be open-minded when it comes to adapting to the market
will make a difference. Typically, the higher the inventory of homes in any
price bracket the lower the prices seem to be driven – therefore we strongly
suggest selling now rather than rely on an uncertain market in the future.
~
If
you would like to explore the options for your home, regardless of price point,
contact us today for a customized consultation on how we can help you achieve
your real estate goals. We look forward to serving you! Call 760.774.0105
today!
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