Home / Uncategorized / Absorption rates

Absorption rates

By Matt Goyer June 11, 2007

Casey at CondoCompare blogs about absorption rates. The real meat is in this scanned table of some downtown condos.

Looks like Trio is still suffering at only 23% sold. But what is up with the negative absorption rates there and at The Parc? Is that how many people bailed on their PSA?

I own and manage Urban Living, a boutique Seattle and Bellevue real estate brokerage. I love lofts, floating homes, new construction, and mid-century moderns, but I will help you buy or sell just about anything!

Get in touch to:

Understand the market
Find your perfect home
Sell your home

Contact:
[email protected]
206-203-6242

22 responses to “Absorption rates”

Dan C says:

June 12, 2007 at 3:11 pm

Trio seems like it has been doomed from the beginning. You are on the corner of two very busy streets, no parking anywhere for friends, small decks, wood construction, etc. (I don’t know anything about the interiors though…)

For the price, I think there are much better complexes out there that are much nicer and in better locations.
Dan C says:

June 12, 2007 at 7:11 am

Trio seems like it has been doomed from the beginning. You are on the corner of two very busy streets, no parking anywhere for friends, small decks, wood construction, etc. (I don’t know anything about the interiors though…)

For the price, I think there are much better complexes out there that are much nicer and in better locations.
dan says:

June 12, 2007 at 3:58 pm

The Parc announced another delay in May, so I am not surprised at people backing out.
dan says:

June 12, 2007 at 7:58 am

The Parc announced another delay in May, so I am not surprised at people backing out.
EconE says:

June 12, 2007 at 6:13 pm

shouldn’t absorption take into account all the units that flippers can’t sell?

I have about zero respect for condo compare as they have

a. consistently spammed sites with their ads.

b. are now spinning the facts with regards to absorption and inventory unless they are just including what the “fat cat developers” were able to pawn off on specuvestors. Just look at their tally for the Cosmo.
EconE says:

June 12, 2007 at 10:13 am

shouldn’t absorption take into account all the units that flippers can’t sell?

I have about zero respect for condo compare as they have

a. consistently spammed sites with their ads.

b. are now spinning the facts with regards to absorption and inventory unless they are just including what the “fat cat developers” were able to pawn off on specuvestors. Just look at their tally for the Cosmo.
Dan C says:

June 12, 2007 at 6:22 pm

No, absorption only takes into account units that are bought/sold/flipped. Anything that is unsold sits in inventory, which has increased something like 10+%/month for the past 8 months. Once that reaches a critical level, and demand continues to decline, you will see a serious drop in prices, along with some bankrupt developers.
Dan C says:

June 12, 2007 at 10:22 am

No, absorption only takes into account units that are bought/sold/flipped. Anything that is unsold sits in inventory, which has increased something like 10+%/month for the past 8 months. Once that reaches a critical level, and demand continues to decline, you will see a serious drop in prices, along with some bankrupt developers.
Dan C says:

June 12, 2007 at 6:26 pm

MTM Inventory change for Seattle:

Month InvCh
Jun-06 17.17%
Jul-06 19.29%
Aug-06 23.91%
Sep-06 28.79%
Oct-06 30.78%
Nov-06 27.72%
Dec-06 22.94%
Jan-07 21.93%
Feb-07 22.50%
Mar-07 32.59%
Apr-07 38.42%
May-07 44.17%
Dan C says:

June 12, 2007 at 10:26 am

MTM Inventory change for Seattle:

Month InvCh
Jun-06 17.17%
Jul-06 19.29%
Aug-06 23.91%
Sep-06 28.79%
Oct-06 30.78%
Nov-06 27.72%
Dec-06 22.94%
Jan-07 21.93%
Feb-07 22.50%
Mar-07 32.59%
Apr-07 38.42%
May-07 44.17%
mhays says:

June 12, 2007 at 7:36 pm

Parc seems to have a problem with their exterior cladding supply — the tower is clad, but the north wing is months behind.

Trio probably did misjudge the market for a woodframe at a noisy intersection. Their sales infrastructure might also be lacking, just a guess. On the other hand, maybe they’re ok with selling most units after completion, expecting prices to be higher then.

A well-capitalized developer can hold condos unsold for years without major worry, assuming that values trend at least a little northward, enough to cover taxes, dues, ongoing broker expenses, etc.

I’m not terribly worried about absorption rates. The numbers seem low, but part of that is the simple absence of investment buyers and the lack of urgency among resident buyers.

Buyers that hold off might not be helping themselves. In two years, condo prices will probably have risen a little, while rents will be much higher.
mhays says:

June 12, 2007 at 11:36 am

Parc seems to have a problem with their exterior cladding supply — the tower is clad, but the north wing is months behind.

Trio probably did misjudge the market for a woodframe at a noisy intersection. Their sales infrastructure might also be lacking, just a guess. On the other hand, maybe they’re ok with selling most units after completion, expecting prices to be higher then.

A well-capitalized developer can hold condos unsold for years without major worry, assuming that values trend at least a little northward, enough to cover taxes, dues, ongoing broker expenses, etc.

I’m not terribly worried about absorption rates. The numbers seem low, but part of that is the simple absence of investment buyers and the lack of urgency among resident buyers.

Buyers that hold off might not be helping themselves. In two years, condo prices will probably have risen a little, while rents will be much higher.
Phil says:

June 12, 2007 at 10:34 pm

“A well-capitalized developer…”

I’m still laughing!!
Phil says:

June 12, 2007 at 2:34 pm

“A well-capitalized developer…”

I’m still laughing!!
Mike Plummer says:

June 13, 2007 at 3:50 am

You would think that condo developers would be among the first in the real estate industry to adapt to the whole web 2.0 shift in marketing.

One look at the Williams Marketing website shows you just how outdated the entire web marketing conversation is in the condo marketplace.

I haven’t met many real estate professionals at Seattle area marketing industry events. I keep looking for Matt, but he’s probably too busy to attend!
Mike Plummer says:

June 12, 2007 at 7:50 pm

You would think that condo developers would be among the first in the real estate industry to adapt to the whole web 2.0 shift in marketing.

One look at the Williams Marketing website shows you just how outdated the entire web marketing conversation is in the condo marketplace.

I haven’t met many real estate professionals at Seattle area marketing industry events. I keep looking for Matt, but he’s probably too busy to attend!
mhays says:

June 14, 2007 at 8:48 pm

I don’t know what you’re laughing at, Phil. Are you saying developers tend not to be well capitalized, are you confused by the term, or am I missing a double entendre?
mhays says:

June 14, 2007 at 12:48 pm

I don’t know what you’re laughing at, Phil. Are you saying developers tend not to be well capitalized, are you confused by the term, or am I missing a double entendre?
jo says:

June 14, 2007 at 11:07 pm

Williams website is horrible. I have high resolution on my laptop and the thing fills up about 15% of the screen. Least they got rid of the music.
jo says:

June 14, 2007 at 3:07 pm

Williams website is horrible. I have high resolution on my laptop and the thing fills up about 15% of the screen. Least they got rid of the music.
Mike Plummer says:

June 14, 2007 at 11:21 pm

I had meant for my previous comment to attach to the FoREM on Niche Marketing post… must have commented in the wrong tab.
Mike Plummer says:

June 14, 2007 at 3:21 pm

I had meant for my previous comment to attach to the FoREM on Niche Marketing post… must have commented in the wrong tab.

Absorption rates

Ask Matt a Question

Ask us a Question

Keep your finger on the pulse each week