If you are interested in buying real estate in Summit County you may start looking at market statistics to get a feel for the state of the market. Those market statistics may not mean much until they are put into the perspective of the Summit County market. If you hear that there are 1000 properties for sale, it’s hard to know what that means. Is it a seller’s market or a buyer’s market? Are the 85 sales last month exceptional or terrible? Without some context, statistics are relatively useless. That’s why one of the statistics we look at every month is the absorption rate. It automatically puts the statistics into the context of the market. That means, even with no additional information, you know where the market is.
Absorption rate is the relationship between inventory and past sales. If in the last year there have been 1200 sales and now there are 300 properties on the market, it is is a fair assumption that it will take 3 months to sell all the inventory. 1200 sales in one year equal 100 sales per month. Therefore, 300 properties should take 3 months to sell. The absorption rate in this example is 3 months. In most markets, three months of inventory is a Seller’s market.
Looking at the Summit County market through the end of October the absorption rate is 3.6 months; a sellers market. When diving deeper into the data we see that Keystone and Breckenridge are both seller’s markets with 3.3 and 4.8 months of inventory respectively. Dillon, Frisco and Silverthorne are extreme seller’s markets with 1.6, 1.7 and 2.3 months of inventory. Copper is still a buyer’s market with 8.9 months of inventory.
With just this one statistic, you have a much clearer picture of the Summit County market. As a buyer or seller, by looking at the absorption rate you have a general overview of what is happening and what to expect. Additional information will help dial it down even further but absorption rate is a fantastic statistic that should be utilized.