We now have the latest Maine Real Estate Information System statistics. Let’s remember these numbers are through October so we’re not actually looking at what’s happening right NOW.
The short version is that the pattern continues. For the month of October, unit sales statewide were down some 12% from last year.
Looking at the rolling quarter (August through October) we learn that Piscataquis County is experiencing an 8% decrease. Somerset is down 5% and Penobscot just under 4%.
Here’s something more interesting, particularly if you are considering listing your property for sale. Most of us remember “supply and demand” from our high school economics class. In real estate, we can use something called an “absorbtion rate” to consider statistically what might happen when we list based on supply and demand.
For no particular reason I’ll use Dover-Foxcroft as my example. It’s a great town that happens to be the county seat for Piscataquis County. My example uses MREIS data and does not include properties sold by owners or real estate companies who are not part of the Multiple Listing System.
When I wrote this in late December 2007 there were 84 residential properties “on the market” (for sale) in Dover Foxcroft. During the last 6 months, 54 residential properties “sold.” That means an average of one home has sold each week. (We’re going to keep this very basic. Statistics can make your eyes glaze over fairly quickly. Staying basic also means the numbers and conclusions are “debatable” but we are more interested in the concept than the actual numbers.)
The absorbtion rate is most simply defined as the number of weeks it will take to “absorb” (sell) the current inventory at the current rate of sales.
With 84 homes on the market (assuming no more are listed and none are taken off the market) it will take 84 weeks (that’s about 20 months) for all those properties to sell. So if you are considering putting your property on the market… think you might have to be a little patient?
Another way of looking at this: Statistically, four properties are going to sell next month in Dover Foxcroft. Those four buyers have over 80 to choose from! Who wants to predict which four are going to sell?
By the way, the most “proper” way to calculate absorbtion rate is to use the previous four week’s sales. I had to go back further because there were no sales in the immediate previous four weeks! So based on the most recent data, the absorbtion rate is actually much lower.
Again, in this example we are talking in general numbers. This type of analysis has the most meaning when we “drill down” and look at markets within the market. It’s possible a new listing (the 85th) becomes one of the first to sell. If you are considering selling your home the question becomes “How do my agent and I make that happen?”