Let's take a quick look at some numbers backing up what I am referencing here.
As the graph to the left indicates, over the past 15 months, there have been many times where the absorption rate has exceeded 100% based on closed sales. That means that more homes closed escrow than were placed on the market for sale. Now its not surprising that this metric topped 100% in December because many home owners don't list their home for sale during the holidays or more precisely from about the week before Thanksgiving until after the first of the year. In fact, as you can see on the chart below, the homes for sale rose steadily between April 2014 and September and then started declining through the end of the year.
Its no coincidence that as the homes listed for sale in the MLS steadily increased, the absorption rate decreased. Here's why.
Contrary to popular belief, there is not an infinite number of buyers in the market at any given time. Yes there may be more buyers during the traditional peak buying season in the Spring, but over the past few years with the inventory low the flow of buyers has been relatively steady. In fact, personally, I have sold more properties the last four months of the year for the last three years than I have during the first eight months. But that may be just me.
There's always a lot of discussion about when to place your home on the market with the conservative approach being during the Spring. Based on the data and trend reports, wrong.
Where I see the greatest opportunity is February and March. Probably some other people do also because inventory may peak in February and absorption rate drop. But then you see that reverse by March when inventory drops and the absorption rate hits over 100%.
This year, there may even be more reasons to list earlier in the year as once again all the economists are predicting that interest rates will rise. We've heard that fairly consistently for quite a while now and rates are still at near historic lows. But even a broken watch is right twice a day!