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Absorption Rates
There has been a lot in the news about a decline in the average national median home price over last year. It is important to remember that real estate is local, so here are some numbers for the twin cities metropolitan area and for St. Paul, Minnesota
The overall absorption rate for the metro area is 8.57 months, up 132.9% from two years ago. The calculation looks at the total number of homes that are on the market in a month and how many homes have been sold during the same month.
According to the Minneapolis Area Association of Realtors, sellers are getting on average 95.3% of their asking price. Metro wide home prices have on average plummeted -0.1% since last year. I like to use the word plummeted because that is how the traditional media likes to report the numbers. Although I have to admit that the New York times said that the nation wide median price decrease is projected to me a modest 1 to 2%, and added that it is the first nation wide median price decrease since 1950.
Because Real estate is Local, here is a peak at absorption rates for the seven county metro area by county for the last 30 days for single family housing units including condos and town houses:
Anoka County - 11.9 Months
Carver County - 8.6 Months
Dakota County - 7.8 Months
Hennepin County - 8.4 Months
Ramsey County - 8.4 Months
Scott County - 11 Months
Washington - 9.2
Real estate is local and market conditions vary by neighborhood, price range and housing style. Townhouses take the longest to sell in our local market, followed by condos.
Also see: Local Market Snap shot and Local Market Conditions and Home Prices
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It looks like the inner city market is doing comparitively OK, which is interesting.
T, do you have a good guess as to what these numbers looked like a few years ago? It seems to me that 4-5 months would probably be normal, based on a rough recollection of people I know that have sold their house. 8.4 months isn't great, but ... it's moving, yes?
Good point, I should have included more in my post. Compared with two years ago absorption rates are up 123%. We used to talk in terms of two or three months. For St. Paul the highest absorption rate I saw was 9 months, but that was during the slow time in December. I would predict that the rate will be higher in the winter than it is now unless something changes. Last year at this time it was about 5.5 to 6 months.
Teresa, useful info for your public to have. Your market looks fairly healthy. This coming from someone whose county-wide absorption rate (Miami-Dade County) is roughly 31 months and one of the cities I specialize in (Homestead, FL) is presently at 40+ months. Double yikes.
Maggie that is my point real estate is local. Our market is healthier than some and worse than others.
The S&P/Case-Shiller Home Price Index numbers reported in today's Wall Street Journal are more accurate than those provided by the Mpls. Association of Realtors. The Journal reports than in the second quarter of 2007, Minneapolis-region housing prices decreased on average 3.8 percent from one year earlier.
Bubble_up - the numbers I reported were year to date so they are different than first quarter numbers and they are for the 13 county metro area.
Right, Ms. Boardman, but the point of your post was that MSP prices are not in fact plummeting but are only off 0.1 percent from 2006; my point is that the 0.1 percent figure is misleading at best, and better sources say the decline has been much greater. What does your own experience indicate?
To be honest my experience and the numbers I tracking are showing a small decrease but it really does vary by neighborhood. Here in St. Paul, off the cuff I would say they have decreased by 2%. In the Mac Goveland, Highland Park and Crocus Hill neighborhoods they have gone up by two or three percent. I am using the data in our MLS. That is the only data I have and I think it represents the vast majority of the homes sold in the metro area. I beleive the numbers for the second quarter alone may be higher than the 1% but that is also misleading because it is just one quarter. I would have to know the source of the data and then I could decide who's data is more accurate. Can you explain what is wrong with the data I am using and how the number is more misleading than the number that you cite?
I would also need to know if we were using data for the same counties.
Ms. Boardman:
“There are three types of lies - lies, damn lies, and statistics.” [Attributed most often to Mark Twain]
Jay
[“Ms Boardman”—I crack me up!]
So does it look like the central is doing better Teresa? As far as statistics were the numbers from the Wall Street Journal about new houses. I have seen new houses doing worse compared to the overall market.