This year is shaping up to be one for the record books, that is for sure. No matter how you cut it, 2020 has broken the mold. In a normal cyclical real estate year, the Spring Market runs roughly from the Super Bowl (remember that?) through the end of the school year (remember that?). But with COVID at its height, the 2020 Spring Market was shuttered along with everything else, only to burst its seams starting in June and it hasn’t shown signs of slowing down yet. Particularly in the low to mid price points, properties are selling in a matter of a few days and often with multiple offers. Even the high price points are moving well. This is great news for sellers, but a huge challenge to buyers. The combination of low inventory and pent up demand has created a fire storm of activity.
Market absorption is a tool that measures the health of a market – with a 5-6 month average sale time considered a normal or balanced market, anything less a seller’s market, anything more a buyer’s market, all by degree. To explain the calcuation and demonstrate the market dynamic, let’s take a look at a few popular communities.
First, to calculate market absorption or time to sell, you divide the total number of properties actively listed by the number that have gone under contract in the last 30 days. The later gives you a good read on the current rate of sale. The end result is expressed in months to sell, and essentially means that if nothing else were to be listed, at the current rate of sale it would take the resulting number of months to absorb all active inventory. If that has your head spinning, don’t fuss, we can talk about it together when next we meet/chat.
Let’s look at Bridgewater and Hillsborough – two popoular communities known for high quality schools, access to transporation/highways and inventory across the pricing spectrum, from condos to single family homes.
- Bridgewater: There are a total of 115 properties actively listed for sale, 54 priced under $500,000 and 61 priced $500,000 and over. In the last 30 days, 87 properties have gone under contract, 49 of them under $500,000 and 38 of them $500,000 or over. Time to sell over all for Bridgewater is 1.32 months, 1.10 for properties under $500,000 and 1.6 months for properties $500,000 and over.
- Hillsborough: There are a total of 69 actively listed properties, 38 priced under $500,000 and 31 priced $500,000 and over. In the last 30 days, 64 properties have gone under contract, 39 of them under $500,000 and 25 at or over $500,000. Time to sell overall is 1.07 months, and .97 under $500,000 and 1.24 at or over $500,000.
These statistics agree with my experience over the last few months. Properites in these communities are flying off the market, very often with multiple offers which is pushing pricing easily to and more often over asking.
If you are thinking of selling your home, now is the time! If you are a buyer, hang in there and align yourself with the best representation you can, hopefully that is me. To buyers that are under contract, hats off to you, for being the victor in a very competitive market.