Housekeeping and swamp coolers

Good afternoon! If you are curious how this site works and how your host manages it, read on and claim your prize at the end of this post.

On the last day of each month I run statistics on current inventory of homes listed for sale. This is done for Santa Fe City and County and is done for all prices and also within specific price ranges.

Those figures usually go up during the late winter thru early summer, then start back down again late summer to mid winter. You might peg the high and low as June and December or thereabouts. So coming into June (approximately at midnight tonight if you are keeping score) we should be at our peak of inventory of homes for sale for the entire year.

That also means that some of the calculations this blog site is famous for (or infamous) are at their full volume now and will be the opposite in 6 or 7 months. It’s a bit like the moon; sometimes its closer to earth and other times its further away. And my statistics are almost as romantic as the moonlight filtered through the trees onto your back portal. Almost.

Then around the 10th of each month, I run the numbers for homes sold using the same categories and search parameters used when I determine inventory numbers. I wait until the 10th because some professional Realtors don’t get around to submitting the sold data on a property sold in the prior month until sometime during the first 10 days of the following month. What a concept! Now and then I will go back a few months and update and correct the numbers since every once in a full moon a sale will be reported a long time after it occurred. So I might have to correct the March sales numbers in June or something to that effect.

Now the primary image I try to impart is what I call the Absorption Rate. This is calculated as follows: beginning with inventory on a certain date (say 3-31-12), I collect data for all sales of the same type of property for the 12 months (365 days) including and prior to the date of the inventory count. Using that end of March date, I gather the total number of solds from April 1, 2011 thru and including March 31, 2012.

Take the year total sales and divide by 12. This gives a monthly average # sold over the last year. Then the current inventory count is divided by that calculation of average number of sales per month over the last year. A recent example in the charts available to the right side of this page would be as of March 31, 2012 for homes from $500,000 to $1,000,000.

The inventory was 390 homes. For the previous 12 months, 280 homes had sold. That would be an average of 23.33 per month. So 390 divided by 23.33 gives you the answer of 16.72 which means it would take 16.72 months to sell all current inventory based on a current trend line of reported sales.

This is meaningful to both buyers and sellers for various reasons. For a seller, finding out a home in his/her price range might take more than 16 months to sell (on average) means some steps might be taken to sell sooner rather than later. Price is the first thing a buyer looks at so if you are a seller and don’t want to wait 16+ months, lowering your asking price is one surefire method of getting attention.

For those willing to slash their price to the absolute bottom of the market, they can almost count on a ready buyer showing up within a few weeks or a month, with a successful closing in another month or so. But not every seller can “afford” to do that.

So another important method of getting one’s home noticed (and possibly sold) is to do all of the little things to make the home as fresh and inoffensive (neutral) and inviting as possible. That can include new paint, new stucco, some landscaping (for the first impression, not to raise the price), removal of almost all clutter and personal effects, freshly baked cookies (OK, that is just for me, you don’t get any)…

For a potential buyer, the absorption rate can inform them of the health of the market right now which might help them arrive at some conclusions about how to price their offer, or how far to go during negotiations. Remember, the asking price means almost nothing. The sold prices have true weight. If you tell me other homes have higher asking prices than yours, you still might be overpriced compared to the actual sold figures. Buyers mostly know that, but it never hurts to review those facts.

Of course, most buyers seem to think they should get the home they want to buy at a substantial discount from its current asking price. Sometimes the price is still higher than comparable recent sales, but other times the seller has taken the price down to a quick sale level and is either not willing or not able to negotiate the sales price any lower. Buyer should be sensitive to that possibility, and if they think they are the only buyer looking at that home, they need to think again.

More and more now we are seeing multiple offers come in on a home that’s priced right. The good ones are generating lots of interest and buyers are starting to realize they need to move quickly to secure the home they really want.

So now for the prize at the end of this post… Gee, how about a cup of coffee, on me, where you and I discuss real estate and you tell me everything you know and I tell you everything I know and then we have another cup of coffee just for fun. Do you have a swamp cooler? Me too.

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