Wow - Absorption Rates Rocket Up in Steamboat Springs, Colorado

From 15 to 9 month of inventory in one year. That's improvement.

Real estate absorption rate is the rate at which properties are sold in a given area. The numbers below shows how many months of available inventory we have here in Steamboat Springs, Colorado. As you see, the tend is good. That is a very healthy sign that the real estate market is improving in Steamboat Springs. Only condos sales did not improve.

Normal real estate market = 5 - 6 months of inventory

Seller's Market = 1-4 months of inventory

Buyer's Market = More than 7 months of inventory

Single Family Homes inventory= 136
• December 2011= 9.71 months
• January 2011 = 15.9 months
• December 2010 = 13.4 months

Townhomes / inventory = 134
• December 2011 = 10.3 months
• December 2010 = 18.0 months
• November 2010 = 20.2 months

Condo / inventory = 344
• December 2011 = 22.0 months
• December 2010 = 22.3 months
• November 2010 = 23 months

Real estate absorption rate: There are currently 136 single-family homes for sale in and around Steamboat Spring (Downtown, Fish Creek, Mountain, Strawberry Park, & West Steamboat). From mid- November to mid- December, 2011, 14 homes sold in these Steamboat Springs areas.

If you take the current inventory of 136 homes and divide that by how many homes closed in the last 30 days (136/14), you get 9.7 months. That means if the current inventory stayed the same – meaning no other homes were put on the market, and the rate of closed sales remained the same, it would take 9.7 months to deplete or sell the existing homes. Or an absorption rate of 9.7.

Why is it important to know the absorption rate?

For those sellers:
If you are looking to sell your Steamboat Springs home the absorption rate will help you determine where you should price it for a quick sale. For example, say you are thinking about pricing your home at $550,000 and I calculated the absorption rate for homes priced between $550,000 - $600,000 was 13.8 months. But homes priced between $500,000 - $549,000 had an absorption rate of 8 months. If you were looking to a fast sale, you might price under $549,000. However, if you weren't in a hurry and were prepared to wait, you might price over $550,000.

For those buyers:
If you are looking to buy a Steamboat Springs home, knowing absorption rate may help you negotiate a better deal. Let's say you are looking at two homes. One is in Fish Creek Falls area with an absorption rate of 9 months. While the other is located West of Steamboat with an absorption rate of 13.2 months. You may decide to purchase the home in West Steamboat because the seller may be more negotiable on their price because inventory is moving slower there. Conversely, lower absorption rates might designate a more desirable area. Thus, if these trends continue, a lower absorption rate area might be a better investment.

Absorption rate is an important indicator of what is going on in your market and should not be overlooked. As in the examples above, the absorption rate can vary from city to city, neighborhood to neighborhood and even from one price range to another.

It's still a buyers market in Steamboat Springs, but if this trend continues, our real estate market is showing great sign of improvement.