Riverside California absorption rates

To refresh those who may be new to this statistic, the absorption rate is based upon two things:  The number of properties for sale in a given geographic area, and the number of sales taking place within that area in a certain, fixed period of time.  Divide one number into the other, and you have, in theory, how long it would take for all the properties to sell at the current pace of sales.  The explanation is cumbersome…the rate is not.

 For example, in the Riverside California area, according to the statistics available in our regional Inland Empire MLS data base, as of November 1, 2007, there were 3191 properties for sale, and in the previous month of October, there were 105 sales registered for that month.  Dividing the sales into the available inventory, you get 28.0 ( the absorption rate)…which means that at the current pace of 105 sales a month, it would take 28 months to sell everything available for sale.  As a comparison, last year in 2006 at this exact time, the absorption rate was 9.2!

What does all this mean?  Well, don’t take the absorption rate too literally…but it is a good indicator of market direction when compared with previous months.  The absorption rates for August, September, and October of 2007  were 30.8, 39.0, and 36.2 respectively.  Our rate for November is down a little, but let’s not microanalyze.  This simply could be a seasonal variance…time will tell.  In the meantime, simply understand that things have not changed from all our previous newsletters and postings.  The bottom line for a seller is that you can get your home sold as long as you are serious and understand you have a great deal of competiton…and for you buyers out there, what in the world are you waiting for?  Interest rates (fixed, 30 year loans, not the junk that bites you later) are near historic lows, and after years of the seller calling the shots, you now have the major say in the purchasing equation.  So…the real estate market is there for you to explore.  Good luck.