Is it a Buyer’s Market or Seller’s Market? Understanding Solano County, CA Absorption Rates.
How can you determine whether it’s a buyer’s market or a seller’s market? By looking at housing market absorption rates.
The Market Absorption Rate, also known as months of supply, measures the number of months projected to deplete the existing inventory of homes based on the current monthly sales, assuming no new homes will come on the market. It is calculated by taking the total number of active listings and dividing by the number of homes that have gone under contract in the last 30 days and is expressed in months to sell.
For example, if 100 homes sold per month and there are 800 homes currently for sale, then there is an 8-month supply of inventory for this particular market.
Absorption Rate: 800 listings / 100 average sales per month = 8 months of inventory
In a Normal Market homes generally take between 5-6 months to sell. In a Seller's Market, like the one we are in now, homes sell more quickly. In a Buyer's Market, homes take longer to sell.
We have found a direct correlation between market absorption rates and property values. As absorption rates increase beyond a normal level of 5-6 months, property values depreciate annually. And as they decrease below the normal level of 5-6 months, property values tend to appreciate.
In Solano County, the current absorption rate is about 1.5 months of inventory. This is lowest we’ve seen it in 4 years! If you have a home to sell, now is the time as buyers are plenty and homes are few. As long as your home is in good condition, expect multiple offers because the demand is there.
Buyers should also be prepared for multiple offers, as many of the available homes today are getting at least 3 offers. With this much competition among offers, your first offer should be your highest and best. The days of lowballing and getting a huge deal on a home below market value are pretty much gone unless the property needs a lot of work.
The good news is that prices and interest rates are still the lowest they have ever been in the past 30 years, and with the right real estate agent, you can navigate multiple offers and still save a ton of money on your dream home.
The Browns Valley subdivision has historically been one of the hot spots of Vacaville real estate. Since it's construction in the 1980's, families have been flocking to the area for it's proximity to shopping and employment centers. Now more than ever, with Genentech and a new Kaiser facility nearby, demand for these traditional American style homes in Browns Valley is surging.
Here's a breakdown of selling trends in Browns Valley for 2011:
|
Selling Price Range |
Quantity |
Average DOM |
|
|
$160,000 thru $179,999 |
1 |
152 |
|
|
$180,000 thru $199,999 |
1 |
50 |
|
|
$200,000 thru $249,999 |
18 |
65 |
|
|
$250,000 thru $299,999 |
22 |
59 |
|
|
$300,000 thru $349,999 |
13 |
86 |
|
|
$350,000 thru $399,999 |
3 |
47 |
|
|
$400,000 thru $449,999 |
0 |
0 |
|
As we see here, the majority of homes sold in Browns Valley in 2011 were between $250,000-299,999. Considering this, less than 2 months on the market is a great indicator for today's home seller. Buyers are definitely out there and Browns Valley is still in high demand, even in the Winter months. Generally, an average days on market figure below 65 days signifies a seller's market. This is confirmed by the many homes we're seeing with multiple offers that are actually selling above listing price.
Need a Realtor who knows the Browns Valley area in Vacaville, CA? You've probably seen us and our bright orange open house signs in your neighborhood. Call us today to get your home sold... Guaranteed! (707) 301-8694
Which is better... lower price or lower interest rate? 
In a buyer’s market, buyers wait for signs that prices are going lower. In a seller’s market, buyers don’t wait because they’re afraid prices will go higher. Both markets move on the fear of paying too much.
Right now, buyers have the best of both worlds – home prices have rolled back to nearly a decade ago, and mortgage interest rates are at record lows. Yet, many buyers are still waiting for a sign that it’s the right time to buy.
Should you wait for lower prices or lower interest rates before you jump in? Consider the following:
The price of a home is fixed. Buyers have figured out that interest rates can change, so they wait for prices to go lower, but what they don’t realize is that prices have to drop significantly to equal a minor fluctuation in mortgage interest rates.
A quick visit to a mortgage calculator will show you the following:
Home prices today are well below the peak of the housing boom in 2005, and mortgage interest rates are at all-time lows. Sooner or later one of them will move up.
Why not buy now while both are low?
A Storybook Christmas
Saturday & Sunday December 17th & 18th
Invite all your family and friends to come experience an inspiring production, "A Storybook Christmas", at The Father's House in Vacaville and Napa.
Vacaville
Saturday - 6:00pm
Sunday - 8:30, 10:00, & 11:30am
126 Peabody Rd, Vacaville, CA 95687
Napa
Sunday - 9:00 & 11:00
2557 Napa Valley Corporate Dr, Suite I, Napa, CA 94558
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Andrew Lamb is a Northern California native, specializing in short sales and bank owned foreclosure properties to help Solano County home sellers and buyers sell or buy for the best price possible.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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