San Bruno Weekly Real Estate Stats Roundup
- New Listings 10
- REO 3
- Condo/Townhome 2
- Mean (SFR) $622687
- Median (SFR) $612000
Calculating the Absorption Rate
The definition of the real estate absorption rate is the number shows the rate at which the inventory of homes for sale are being sold (www.wikianswers.com). A declining figure indicates people the inventory is decreasing as more homes are being sold than are coming onto the market. A increasing number indicates that the inventory is increasing as less homes are being sold that are coming onto the market. Pretty basic information, all REALTORs are aware of this. What I find interesting is that there are a couple of ways to calculate an absorption rate from what I’ve seen. Instead of a debate, I will quote the formula used by Realtor Magazine (http://www.realtor.org/RMODaily.nsf/pages/News2007111404)
- First, determine the number of homes closed in your market over a specific period — say, 12 months. You can get this data from the MLS.
- Next, divide the number of homes by the number of months in the period — in this case, 12. This calculation gives a per month absorption rate.
- Last, divide the rate into the number of current listings. This yields the months’ supply of homes.
By this calculation, the current absorption rate for San Bruno (I use a 30 day rolling window) is 9. Since I’m using a weekly number and not a monthly number as described above, this is the week’s supply of homes.
I’ve also seen this number calculated this way:
- Number of listings sold in a month (30 day rolling window)
- Multiply this number by 12 for a monthly total.
- Divide the product by 52 for a weekly average
- Divide this number into the number of active listings on the market.
By this calculation, the current absorption rate for San Bruno is 9.4
- Sold Properties 24 x 12 = 288 / 52 = 5.5 per week
- Current Active Listings 54 / 5.5 = 9.4
Let’s follow this rate over the next few weeks to determine the trend in the San Bruno Marketplace.
Filed under: Buyer's Blog, Market Data, Seller's Blog
Joe Capote 