By Deborah A. Ten Brink
The real estate market in Lehigh Acres is on the upswing! For the past few years, the main activity has been short-sales and bank-owned properties. But, in March 2012, we saw that the types of properties sold have shifted from these distressed properties to conventional sales. According to the REALTOR® Association of Greater Fort Myers and the Beach, Inc., 63.25% of the single family homes sold in March 2012 were conventional sales, while 19.33% were short-sales, and 17.42% were foreclosures. When you compare these numbers to March 2011, conventional sales only accounted for 34.81% with short-sales at 20.03% and foreclosures at 45.16%. Click here to see pdf.
I am often confronted these days by people that think the real estate market in Lee County, and more specifically, Lehigh Acres, is flat. As an industry professional who lives, breathes, and dreams about real estate each day, it may surprise you to hear that my response in today’s market is that sales are brisk. We are seeing multiple off6ers on listings quite frequently. Just how fast is our Lehigh Acres market moving? One of the indicators we use to determine the supply and demand of our local housing market is the “absorption rate.”
Once you know the absorption rate, you can determine how many months it would take to sell all of the homes for sale in our local area at the current selling rate. How is this information valuable to someone whose home is on the market or to those contemplating selling their home in the near future? The higher the absorption rate, the more aggressive traditional home sellers have to be in order to capture the attention of the majority of buyers! Click here to access pdf.
In order to find the absorption rate, there are two things you need to know:
1) The total number of active listings on the current market.
2) The total number of properties sold over a specific time period.
Once you know the total number of active listings, divide that by the average number of sales per month. The result is the absorption rate or a pretty accurate estimate of time in months of how long it would take to sell off the complete current inventory of property listings. Keep in mind this number is arrived at by using “current inventory” numbers, not additional future listings.
By knowing the absorption rate, we can tell how quickly homes for sale are being sold. A decreasing number indicates that the number of available homes to buyers is shrinking. We are then in a “seller’s market.” Sellers have the advantage because supply is smaller than the demand for homes. When the absorption rate is rising month-to-month, just the opposite is true. We will see more homes coming on the market than we have buyers for; supply has outpaced sales. We then have a “buyer’s market.” Buyers have the advantage as sellers have to try harder to stand out and get qualified buyers to choose their home. The number one thing to remember about the absorption rate is that it answers the question, “Is the current market inventory decreasing or increasing?” or “Is this a seller’s market or buyer’s market?” The absorption rate is also an indicator to developers as to when it is a good time to start building new homes.
As you look at the pdf showing the absorption rate by city chart, what do you notice about the rate for Lehigh Acres compared to other cities in Lee County? We currently have the shortest months of inventory! Now you can be an informed buyer or seller and have a clearer understanding of your local market because you can determine the absorption rate for your own purposes. Don’t be caught off-guard: watch for market trends by determining the absorption rate.