Friday, November 9, 2007

What can we learn from the Fletcher Heights Area absorption rates?

Yesterday I posted some charts showing the recent activity in the Fletcher Heights area. My guess is that most neighborhoods in Phoenix will have activity that looks similar.

Today I wanted to take a closer look at the Months Inventory chart, and what it means.



It's important to note that the Months Inventory for the area as a whole is 8.3 months. Why do I bring this up? Because people are throwing these numbers around the internet and the evening news without putting them into context.

If I told you that inventory in the Fletcher Heights area is 8.3 months, and in Maricopa County the inventory is approximately 12 months, you would immediately assume that this neighborhood is in much better shape than most of Phoenix. But mention that to the folks trying to sell their luxury home in this area, who are looking at 42 months of inventory... Not quite the same picture, is it?

And what does this all mean to you? Nothing, really. Every home in every neighborhood should be analyzed individually. There are some neighborhoods out there where homes are selling very quickly. There are others where you probably couldn't pay someone to buy your home! Sometimes the numbers vary considerably for homes with pools compared to those without, or depending on the number of bedrooms, or who built the home, etc. etc.

I could drill down further, and we would see different numbers for Fletcher Heights than Silverton, Dove Valley Ranch, and Parkridge, even though these subdivisions all border each other.

Knowing your own home's absorption rate, and how to define your home's competition, will help to build a good sales strategy. But an absorption rate, or an inventory number, hanging out there all by itself... what does it really mean to anybody?

Your putting things into context Realtor,

Chris Butterworth

[tags] Fletcher Heights, Absorption Rates, Inventory [/tags]