Westcoe Realtors, Riverside California…Based upon the latest MLS statistics as of September 1, 2008, the all important sales absorption rate has dropped to it’s lowest level since April of 2006. The absorption rate is a measure of the relationship between sales and existing inventory, and specifically indicates the length of time (in months) that it would take to sell all the available listing inventory at the most current rate of sales. This months new figure is 5.5, meaning that at our current rate of sales, it would take 5.5 months to sell everything that is now currently for sale in the Riverside area MLS.
This new low level is a direct result of the increasing number of properties that are now selling in the Riverside area. The bulk of the sales are taking place in the lower price ranges, as investors and first-time buyers reap the benefits of the lower prices now available as a result of the declining price market of the past 12 months. Listing inventory has remained relatively stable, but the rate of sales has climbed steadily since the first of the year (see chart below).
Month Active listings for sale Sales Absorption rate
January 2706 154 18.0
February 2776 221 12.6
March 2837 317 8.8
April 2778 368 7.4
May 2773 445 6.1
June 2698 428 6.1
July 2602 426 6.0
August 2550 463 5.5
This increased sales activity has finally reached the mainstream media, as even the local press has acknowledged what we at Westcoe have known for months…that while no one can deny the ill effects of falling prices for existing homeowners, these new lower prices have brought back into the purchasing market many people who were completely priced out of the previous red-hot real estate market of the last few years. As sanity has returned to both the pricing levels and financing markets, there are more and more families who now see this as the ideal time to purchase a home.
The other item to note from this chart is that the number of available properties for sale is slowly dropping from the 2008 high of 2837 homes for sale in March. This is an indication that while the number of repossessions has actually increased during this time, the rate of sales has more than offset this increased availability.
The net result is that our current real estate market is far more active than most individuals think. Once again, the media has done an outstanding job of making most everyone afraid of their real estate shadows, but those families who really see the market for what it is (and not what the media thinks it is) are reaping the rewards of affordable pricing and financing.
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