Soaking up Sales: Early April Absorption Rates in Different Price Ranges

Absorption rates present a picture of how quickly properties are selling. An absorption rate analysis examines the current inventory of homes and looks back 6 months to see how many sales there have been to determine a monthly rate of sales over the most recent time period. Dividing the current inventory by the monthly rate of sales provides the number of months of inventory of homes.

Traditionally, 6 months of inventory is considered a balanced market. More than 6 months of inventory means that the market favors buyers. Less than 6 months of inventory and sellers are favored.

For the present analysis, I reviewed data on home sales for Alexandria City, Arlington County, Fairfax County, and Falls Church City (in other words, Northern Virginia).

In some of the lower price ranges, buyers have been soaking up sales of home like a dry sponge, leaving inventory in very short supply. For example, in the $200K - $400K price range, there's only 2.76 months of home inventory on the market. Contrast that with the $3 million plus uber-luxury market which has a 49.2 month supply of homes.

The data in the chart below should be useful to you whether you are planning to buy or sell a home in Northern Virginia in the near future:

The sweet spot of sales is most certainly in the $200K-$400K price range.

While homes in the $800K-$1M price range and the $1M-$2M price range in Northern Virginia are selling at basically the same rate, there's almost 8 months of additional inventory of the higher priced homes.

Interested in the absorption rates for your zip code, style of home, or area? Just click here and let me know and I'll be happy to provide you with this analysis that can play a big factor in pricing your home for sale or deciding upon an offer price for your next home.