Is it a Buyer’s Market in Kent Washington or a Seller’s Market in Kent Washington? How can we tell? One tool we use in the real estate industry is the calculation of absorption rates. In simple terms it is the amount of time it takes to sell all of the current home inventory if no other homes come on the market for sale.
Looks like today Kent, Washington is still in a buyer’s market. What I have done is calculated all of the homes listed for sale in the categories of active, pending inspection, pending feasibility, pending bu requested, pending short sale and even pending to arrive at the number of homes available on the market. Even though the pending homes really are not available for new contracts they have not sold and closed yet. These home still have a probability to come back on the market.
The definition of an absorption rate is the mathematical relationship of supply and demand. The absorption rate is the number of months it would take to sell the entire inventory of homes in the Kent, Washington area of King County if the pace were to stay constant.
The Absorption rate in the Kent area is approximately 8.162 months of inventory if the current conditions remain unchanged. Now if we didn’t include the homes that are listed as pending the Kent area would have approximately 2.42. months of inventory and be a seller’s market. Remember absorption rates track trends.
Using absorption rates can help you define markets. My definition breaks down like this…
Normal Market – Between 5 and 6 months of inventory.
Seller’s Market – Between 1 and 4 months of inventory.
Buyer’s Market – 7 months and higher.
Now remember that absorption rates just track trends and isn’t an exact science!