Absorbtion

For those of you in which the concept of absorption is new, don’t worry, it’s pretty simple. Absorption measures the rate at which condos are sold over a certain period of time. For instance, the data below represents the number of condos that were sold last month. So you’re asking yourself, “Why is it important?” The absorption rate is a strong indicator of how well a market is doing. If a market has a low absorption rate, this generally means that condos are not selling in a particular area. In turn, this would drive down prices since the market would be saturated with inventory. I have included an analysis of the Seattle absorption rate.

* Information courtesy of FatReport.com

State of Downtown: Months of Inventory

There have been 930 condominium homes listed for sale on in the Downtown Seattle Core, the area defined as area 701 by the Northwest Multiple Listing Service, during the past year. Of those, 296 are currently on the market. Below is a breakdown by price range and absorption rates as well as the monthly supply extrapolated from the past year’s sales activity. Attached is the raw data used for the analysis.

Current Absorption
The overall absorption rate for single level condominium homes downtown Seattle is 52.83 condominium homes per month. Over sixty percent of the homes sold are below $500,000. The market for product above $500,000 represents 37% of the market.
The monthly absorption rate for condominium homes priced between $500,000 & $700,000 in downtown Seattle is 10.75 homes per month. The rate increases to 33.8 per month for condominium homes priced below $500,000.

Current Supply
Based on the absorption rate of the past 12 months there are currently 5.6 months worth of inventory available. In the 500,000 to 700,000 market there is currently 5.77 months worth of inventory. Based on last year's absorption, there is currently 12 months worth of inventory for condominiums priced above $700,000. If you want to sell in this price range, it is time to market condominiums rather than simply list them. Can you say "CondoCompare.com"

Brett Frosaker

Columbia Real Estate