Second Quarter Residential Absorption Rates - Denver Area Real Estate 2007

How many months’ supply of homes are currently on the market and what does that tell us about the health of the Denver real estate market?Balanced Housing Market

I wrote an earlier post, Translating Denver Days on Market, reporting what the average number of days each home was on the market before it was under contract and what that means to people considering a sale. Another way to measure the health of our real estate market is to compare how many months of supply are on hand, or absorption rate (AR). The larger the supply, the more competition there is for sellers and the higher likelihood that prices will drop or concessions will be offered.

For a great overview of Absorption Rates, check out Keith Jeppson’s article, Buyers or Sellers Market? Absorption Rate is the Key! Keith is a wonderful Realtor who blogs out of Salt Lake City.

More Months of Supply = Buyer’s Market = Possible Reduced Prices and/or Concessions

Fewer Months of Supply = Seller’s Market = Possible Price Increases and/or Bidding Wars

The commonly accepted separation between markets is:

Seller’s Market          1-4 months of supply
Neutral Market          5-6 months of supply
Buyer’s Market          7 months and above
 

Area

April AR

May AR

June AR

Avg. AR

Market Condition

Aurora North

8.83

9.32

7.04

8.40

Buyers

Aurora South

5.66

4.86

5.30

5.27

Neutral

Broomfield

5.88

5.05

4.32

5.08

Neutral

Douglas Cnty West

6.93

6.18

7.88

7.00

Buyers

Douglas/Elbert/Parker

6.29

6.06

6.05

6.13

Neutral

Highland Ranch/Lone Tree

3.52

2.90

2.71

3.04

Sellers

Denver Northeast

6.01

5.30

6.00

5.77

Neutral

Denver Northwest

5.03

4.19

3.54

4.25

Sellers

Denver Southeast

4.74

4.29

4.71

4.58

Sellers

Denver Southwest

8.13

7.05

6.21

7.13

Buyers

Jeffco Central

6.63

5.18

4.88

5.56

Neutral

Jeffco North

7.29

4.61

3.90

5.27

Neutral

Jeffco South

5.05

4.23

3.74

4.34

Sellers

Jeffco West/Golden

5.86

3.69

4.11

4.55

Sellers

Jeffco North Central

5.01

4.23

4.30

4.51

Sellers

Jeffco South Central

5.18

4.93

3.77

4.63

Sellers
 AR=Absorption Rate or how many months of supply of houses on the market

 

We have a few areas of town that are moving towards a seller’s market with Highlands Ranch and Lone Tree taking the lead with an average three month supply. Are we in recovery mode? We’ll have to wait and see. It will take more than three months of statistics to make that prediction, but it appears things may be balancing out a bit.
 
Based on information from Metrolist, Inc. for the period of April 1, 2007 to June 30, 2007. Note: This representation is based in whole or in part in content supplied by Metrolist, Inc. does not guarantee nor is in any way responsible for its accuracy. Content maintained by Metrolist, Inc. may not reflect all real estate activity in the market.
 
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This entry was posted on Monday, July 9th, 2007 at 3:21 pm and is filed under Buyers and Sellers, Market Activity, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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  1. Keith Jeppson July 9th, 2007 at 3:43 pm

    Thanks for the credits Jennifer. Nice clear presentation of your market. I hope your clients and readers appreciate the information and how well you present it.

    I’m surprised how much of your market is below 6 months. Your market looks pretty stable. Are you still seeing increasing prices?

  2. Jennifer July 9th, 2007 at 4:43 pm

    Keith, In some areas we are seeing slowly increasing prices. In others, we are still suffering from the high number of foreclosures and short sales. Hopefully we are on the way back. All of your writings inspire me. Thanks!

  3. Michael Krotchie July 9th, 2007 at 7:06 pm

    Jennifer thanks for the informative post! Learn something new every day.

  4. Jennifer July 10th, 2007 at 2:21 am

    Thanks Michael. I’m glad you find it helpful.

  5. Albert G July 19th, 2007 at 7:09 am

    Bookmarks…

    How I add this article to Digg?…

  6. Jennifer July 19th, 2007 at 3:55 pm

    Albert- Click on the share this icon under the article. It will take you to another screen where you can add it to several of the social bookmarking sites. Let me know if you have any problems getting it to work.

  7. Jennifer August 10th, 2007 at 4:22 am

    Moby- Under each article is a share this link. If you click through, you can add the article to a number of the bookmarking sites.

  8. Central Denver Blog » Blog Archive » Highlands Ranch and Lone Tree the Friendliest Neighborhoods for Sellers October 6th, 2007 at 9:30 am

    [...] Sellers     Remember to look at more than one month of statistics to get a better picture on where we are and when might be a good time to buy or sell. I still strongly recommend buying if the time and circumstances are right. Homes are still selling, however a seller needs to price it right and make sure it shows well.   For more information on Absorption Rates, check out these links.   Second Quarter Residential Absorption Rates – Denver Area Real Estate 2007Buyers or Sellers Market? Absorption Rate is the Key   Based on information from Metrolist, Inc. for the period of July 1, 2007 to September 30, 2007. Note: This representation is based in whole or in part in content supplied by Metrolist, Inc. does not guarantee nor is in any way responsible for its accuracy. Content maintained by Metrolist, Inc. may not reflect all real estate activity in the market.             [...]

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