Business Courier of Cincinnati - by Laura Baverman Staff Reporter
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Homeowners anxious to unload their Indian Hill estate or downtown penthouse condo largely have two options these days - discount the price or wait.
On a list of 42 Greater Cincinnati and Northern Kentucky neighborhoods, these two communities ranked highest for monthly absorption rate. That's the number of months it would take to sell all of the existing inventory in a community, based on the average of 12 months worth of sales there.
A "healthy" national absorption rate? About six months, according to the National Association of Realtors.
With 19 and 27 months of inventory, sellers in Indian Hill and downtown must either be aggressive on price or willing to wait for the housing market to turn around, said local Realtors.
Compiled by the Greater Cincinnati and Northern Kentucky Multiple Listing Services, the list gives a snapshot of the local market.
Mount Lookout, for example, holds seven months of inventory while its neighbor Columbia Tusculum averages 13 months.
The Cincinnati communities of Oakley and Pleasant Ridge held the lowest monthly inventories on the list, at just more than five months.
These numbers are likely higher than past years, although the boards don't track historical absorption data. Local home sales hit a record of 33,499 in 2005 but have since declined to 28,185 in 2007.
Realtors point to several reasons for the differences in inventory. It could be price point or quality of homes in a particular neighborhood. Communities attractive to first-time home buyers, for instance, are sitting prettier than move-up communities. And in some areas, the sellers may be more realistic on price.
"When it's not a competitive market, the supply keeps building up," said Lee Robinson, owner of Robinson Realtors in Hyde Park. "The prices in some communities have not adjusted sufficiently to meet demand."
It's a buyers market
The National Association of Realtors sets a benchmark for absorption rate - about six months worth of inventory equals a balanced market. Locally, an absorption rate of 4.5 months has traditionally signaled the balance, said Karen Schlosser, president of the Cincinnati Area Board of Realtors and sales manager at Re/Max Unlimited.
If the number of months of inventory dips below that figure, it's a seller's market. If above, it's a buyer's, she said.
Schlosser uses absorption rate to determine prices for the homes she's selling.
"If I have a house to sell in Indian Hill, and I want to sell more quickly, I have to be a whole lot sharper in price and condition," she said.
Two years ago, what drove up the value and interest in older homes in luxury markets like Indian Hill and Mount Adams was the demand for new ones. With a glut of both new and old homes on the market, and a lower number of available buyers compared to the general market, supply now outweighs demand.
"The run-up was just ridiculous, so Indian Hill is getting killed," said Peter Chabris, an agent with Keller Williams Realty.
"The luster momentarily is off," Robinson said.
It's a different story downtown. Because it has so many units under construction and is generally geared toward the downsizing buyer, it has been hurt by the poor suburban housing markets, said Robinson Realtors agent Cynthia Dammel.
Yet sale prices have not adjusted in either case.
Sellers are often still running up the list price to leave room for negotiation, a frustrating trend for Schlosser.
"It is not a market to be fishing for a price," she said. She's not factoring 2006 or 2007 appreciation into most of her list prices, especially in luxury markets.
"There are homes in this market selling with multiple offers at full price because those properties are priced appropriately," she said.
lbaverman@bizjournals.com (513) 337-9431
