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Dramatic Market Shift in Black & White

July 21, 2009 by  
Filed under Featured, Puget Sound Region, Weekly Sales Ratios

Ok, so it’s really shown in green (buyer’s market), yellow (balanced market) and red (seller’s market) color crayon. But, as you can see below, approximately one year ago the market was an extreme buyer’s market, based on the same statistics we post weekly for just the downtown market. Three months ago a trend started to emerge. Today, we’re seeing much more of a balance, and even some red which represents a seller’s market. Granted, the economy still has some improvements to make. However, the stats show that the window of opportunity appears to be closing. This however is not a sign that prices will skyrocket any time soon, but more of a sign that the market is simply stabilizing.

Color coding in the image below is based off of absorption rate statistics. The Absorption Rate is the ability of the real estate market to absorb or sell all of the houses for sale in a given amount of time. For example, if 10 homes are sold every month and there are 100 homes for sale, it will take 10 months to sell all of the homes currently for sale. If there are 240 homes for sale, the absorption rate will be 24 months (if there are 10 homes being sold a month). A sellers market is considered 0-3 months, a balanced market is 3-6 months, and a buyers market is over 6 months. The rate of absorption is ever changing, but is a great indication of market trends that we track. The trend is obvious at this time, and the window for buyers is closing. If you want more information, or a personal consultation, we have a great reputation for helping our clients make the best decision based on their individual situation. Contact us.

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Comments

3 Responses to “Dramatic Market Shift in Black & White”
  1. Hey James,

    I found your article really informative. I’d never seen these absorption statistics used before, and had generally assumed that reports from Realtors that the window was closing were more marketing tactics, so it’s very interesting to me to see that there are specified ways to monitor a market’s performance. Do you think reports like this will be the determining factor for whether the Fed government will extend/expand the 8K tax rebate?

  2. admin says:

    Since the $8k rebate was designed to stimulate buyer activity, and it appears to have worked, I feel that it’s served it’s purpose. Therefore, my opinion is that I strongly feel that it will not be extended.

  3. Thanks for the response James. That’s a little bit of disappointing news to me, as I’m still resolving personal credit issues and can’t purchase my first home this year, I’ll just have to cross my fingers I suppose and hope it gets extended. Cheers!

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