Buyers Market Vs Sellers Market Needs To Be Re-Defined..

small_sick_house_2Since we are in full swing of the Spring Housing Market I thought I would write about the Health of the Market as it relates to one community where I work.

As of today’s date, there are 300 active single family homes for sale in the city of Evanston, IL.  During the past month 64 homes went under contract.

If you divide the number of homes under contract by the number of active listings you will be calculating for what is normally called the absorption rate. The absorption rate tells you how many months it will take to sell a home in today’s market.

In this example, (64 homes under contract  /divided by 300 active listings) you get an absorption rate of 4.69 months. As Realtors we look at the absorption rate to define the difference between a buyers market and sellers market.

If it takes 1-4 months (30-120 days) then this is considered a buyers market. If it takes 5-7 months (150-210 days) to sell a home this is considered a sellers market.

On the surface the real estate market in Evanston, IL appears to be a buyers market. Now here is the kicker… Out of the 64 homes under contract 17 of those are Short Sales or Bank Owned Foreclosures. This represents 27% of the total future sales in Evanston, IL.

And we know it takes a longer time to get a Short Sale accepted by the bank and closed than a normal real estate transaction.

In conclusion, I think we need to adjust our concept of a buyers market vs a sellers market when the number of  pending sales are  really foreclosures.

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