Absorption Rates, What’s Hot – What’s Not (July 2018)

by David Howell on July 13, 2018

 

As is true every year, the metro DC market has cooled a bit as the summer has heated up, but we still have one of the healthiest real estate markets in the country.

Among the indicators we track to judge how the market is doing is the “absorption rate,” simply the percentage of homes on the market that are going under contract every month – those that are being “absorbed.”  As a reminder, we segment rates this way:

Absorption Rates July 2018 (1)

The percentages are important, but it’s not about the math.  It’s about leverage and making sound decisions. The higher the rate, the more leverage the seller has in negotiations; at lower percentages, buyers generally have clout.  Absorption rates vary widely from neighborhood to neighborhood, from property types and price ranges. As an example, we took a look at attached homes priced between $600,000 and $800,000 in five terrific areas over the last four months to show just how different their market conditions are:

Absorption Rates July 2018

With a 65% absorption rate, sellers in Adams Morgan/Dupont Circle in DC will likely see their homes sell quickly, at or above list price.  And that’s exactly what happened – the average days on market was just 9, and those townhomes sold for an average of 2% above list price. At the other end of the spectrum, buyers looking at townhomes in National Harbor with an absorption rate if 12% can drive a harder bargain – and they did.  The average days on market was 111, and they sold for just 92% of the original list price.

Want to know how your neighborhood is doing?  Give us a call!

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Before joining McEnearney Associates in 1996, David was the owner and Principal Broker of his own real estate company for 12 years. David was the Managing Broker of our McLean office from 1996 - 2010, and was named our Chief Information Officer in September, 2010. In that role, he is responsible for the firm' technology, market information and public relations, and is the author of our MarketWatch newsletter. He is also Principal Broker for McEnearney Associates in Maryland, and is an Associate Broker in Virginia and Washington, DC.

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