Westcoe Realtors, Riverside California…A key sales statistic for the month of December, 2008 shows another healthy improvement for real estate sales for the Greater Riverside area. This key market indicator is called the absorption rate, which is the amount of months it would take to sell all the available properties for sale at the most recent rate of sales. It is computed by dividing the number of homes for sale by the number of homes that have sold in the past 30 days…and for the month of December, this rate has dropped from 6.5 in November to it’s now current 5.6. The chart below will show this relationship.
Month # of homes for sale # of sales Absorption rate
August 2550 463 5.5
September 2465 478 4.9
October 2372 488 5.9
November 2895 421 6.5
December 2735 424 5.6
As you can see, the December rate indicates that at the current rate of sales (424) per month, it would take 5.6 months to sell everything that is available for sale. Of course, there will always be additional homes coming for sale in each month, but this statistic provides a monthly snapshot of the sales activity in the Greater Riverside area.
In the case of December, the sales activity remained constant, but there were fewer properties for sale for the month. This reduction in inventory is typical for the Holiday Season, but it is usually accompanied by a drop in sales activity as well. This year, that was not the case. Sales activity remained strong, which is a very positive indicator that perhaps home prices are near the bottom, and the incredibly attractive 30 year interest rates are attracting many new home buyers into the real estate market.
As a comparison, in December of 2007, the absorption rate was 25.8….which was comprised of 2940 homes for sale and a monthly sales rate of 105. As you can see, the number of homes for sale has dropped by only 7%, but the rate of sales has increased by over 300%. This phenomenal growth in sales activity began in roughly May of 2008, and will hopefully continue into the New Year of 2009.
In the end, we will reiterate what we at Westcoe have been saying for months…that today’s combination of affordable prices and extremely low 30 year fixed interest rates make this the most opportune time to purchase a home in our area…as the 424 people who did so in December can attest!
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