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Plano Absorption Rate – A different perspective


Absorption Rate Details – What is it?

What’s the length of time it would take to sell the inventory of Plano at the current sales rate?

By tracking the absorption rate over time you will gain a better perspective of the real estate market. It can help determined a proper price range of a current property based on the latest monthly sales.  Also, it will confirm realistic price expectations if you are selling or buying a home.  It’s provides more current information than using comps, say 3 to 6 months past, although you need to look at that too.

It’s easy to do from the MLS.  Take the active listings of a given area and divide by the sales of last month and you will get the absorption rate in months.

Take a look at Plano. At the end of February active listings totaled 1146 and there were 72 sold properties – that makes a 6.6 month supply and that is considered a balanced market.  Plenty of choices for buyers and seller pricing must be competitive.  Now lets take a look at individual zip codes for February:

75093: 278 active listings, 34 properties sold – absorption rate is 8.2 months
75024: 192 active listings, 16 properties sold – absorption rate is 12 months
75025: 178 active listings, 36 properties sold – absorption rate is 4.9 months

What this means is activity in 75025 has been greater because of price points and reductions taken that have helped spur the market.  75093 and 75024 have higher end price points and that has hurt sales because of the credit markets.  However, you can also drill this down by price point to get a clearer picture. By watching the absorption rates it will help you get a more accurate pricing scenario of a particular area.

About Terry Smith

Passionate about real estate, positive problem solver, specialty boutique real estate brokerage that does things your way! A full-time Broker & REALTOR®, helping people buy and sell homes in the Dallas - Plano area. Whether you're a buyer just starting out or someone with luxury properties to sell. I have extensive knowledge and experience to help you with your real estate transaction. I am a native Dallasite. Have questions? Ask me. You can find me on Google+ and Pinterest.

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