Market Conditions Question

[Queen Bee]

How do you calculate the rate of absorption and at what point would you say there is an over supply of inventory?

 

[Judy Whitehead (Florida)]

You can Google Absorption Rate Analysis and get some good explanations, but basically, you determine how many homes are on the market within the subject's parameters (neighborhood, size, amenities, etc.), then determine how many sales you had during the last year (or six months or whatever the client wants you to use as a guideline) and if you have, say 48 on the market and 24 that sold over the last year, then the market is absorbing only 1/2 home per month. Therefore, you have a 24 month supply......as I tell my trainees, divide the big number into the little number and that tells you how many (or part of) homes are selling each month.

BTW it was one of my trainees who was smart enough to "Google."

 

[Kevin A. Spellman]

This is what I provide. It may look long, but I use it for each Quincy assignment and just edit to reflect the subject and the effective date of value.

QUINCY - MLS ANALYTICAL YEARLY SALES DATA 2000-2007

2007: 410 sales: $165,000 - $1,901,828, average $367,485, median $344,500 and an average of 107 days.
2006: 416 sales: $120,000 - $1,190,000, average $380,506, median $360,000 and an average of 101 days.
2005: 499 sales: $110,000 - $2,290,000, average $398,028, median $378,000 and an average of 77 days.
2004: 477 sales: $115,000 - $995,000, average $377,794, median $360,000 and an average of 59 days.
2003: 442 sales: $160,000 - $950,000, average $352,504, median $332,000 and an average of 62 days.
2002: 415 sales: $122,500 - $895,000, average $315,189, median $300,000 and an average of 52 days.
2001: 356 sales: $100,000 - $1,000,000, average $274,839, median $262,000 and an average of 49 days.
2000: 412 sales: $86,000 - $795,000, average $238,071, median $224,750 and an average of 77 days.

2007: List Price/Sales Price Ratio 96% - Original List Price/Sales Price Ratio 92% - Total Market Volume: $147,361,628
2006: List Price/Sales Price Ratio 96% - Original List Price/Sales Price Ratio 92% - Total Market Volume: $158,290,403
2005: List Price/Sales Price Ratio 96% - Original List Price/Sales Price Ratio 91% - Total Market Volume: $198,616,216
2004: List Price/Sales Price Ratio 97% - Original List Price/Sales Price Ratio 95% - Total Market Volume: $180,207,590
2003: List Price/Sales Price Ratio 97% - Original List Price/Sales Price Ratio 99% - Total Market Volume: $155,806,798
2002: List Price/Sales Price Ratio 97% - Original List Price/Sales Price Ratio 90% - Total Market Volume: $130,803,455
2001: List Price/Sales Price Ratio 96% - Original List Price/Sales Price Ratio 94% - Total Market Volume: $97,842,698
2000: List Price/Sales Price Ratio 95% - Original List Price/Sales Price Ratio 94% - Total Market Volume: $75,430,327

Like most communities in the Boston area the highest prices occurred in 2005. Both the average and the median prices have decline. The average sales price between 2006 and 2007 was a negative 3.4%. The median sales price between 2006 and 2007 was 4.3%. This data does not appear to reflect the subject and the sales presented in this report. The subject's subdivision market of the $325,000 - $425,000 price level appears to be stable.

H3MLS LISTING HISTORY FOR QUINCY SINCE JUNE 2007

06/01/2007: 204 listings, $209,000 - $2,200,000, average $455,831, median $379,900 and an average of 148 days.
07/01/2007: 213 listings, $177,700 - $2,200,000, average $458,121, median $379,900 and an average of 132 days.
08/01/2007: 213 listings, $177,700 - $2,200,000, average $452,347, median $385,000 and an average of 131 days.
09/01/2007: 212 listings, $209,000 - $2,200,000, average $454,389, median $379,900 and an average of 136 days.
10/01/2007: 219 listings, $189,900 - $2,200,000, average $445,058, median $379,900 and an average of 124 days.
11/01/2007: 205 listings, $180,000 - $2,200,000, average $433,747, median $374,900 and an average of 132 days.
12/01/2007: 187 listings, $179,900 - $2,200,000, average $431,042, median $369,900 and an average of 124 days.
01/01/2008: 149 listings, $189,900 - $2,200,000, average $416,969, median $374,900 and an average of 151 days.
02/01/2008: 156 listings, $179,900 - $2,200,000, average $429,638, median $379,900 and an average of 160 days.
03/01/2008: 155 listings, $179,900 - $2,200,000, average $419,803, median $385,000 and an average of 167 days.
04/01/2008: 146 listings, $179,900 - $1,250,000, average $414,677, median $382,460 and an average of 163 days.
05/01/2008: 165 listings, $164,900 - $1,350,000, average $413,858, median $379,900 and an average of 143 days.
06/01/2008: 182 listings, $199,000 - $1,350,000, average $406,429, median $377,000 and an average of 139 days.

I do not believe there is an over-supply of listing throughout Quincy for the single-family market as of June 06, 2008.

QUINCY MLS MONTHLY SALES DATA SINCE JANUARY 2008

01/2008: 21 sales: $126,575 - $745,000, average $354,194, median $330,000 and an average of 102 days.
02/2008: 15 sales: $180,000 - $625,000, average $314,050, median $290,000 and an average of 123 days.
03/2008: 25 sales: $239,900 - $550,000, average $342,604, median $325,000 and an average of 120 days.
04/2008: 35 sales: $178,000 - $555,000, average $329,761, median $315,000 and an average of 106 days.
05/2008: 35 sales: $165,000 - $545,000, average $338,950, median $339,000 and an average of 96 days.

01/2008: List Price/Sales Price Ratio 94% - Original List Price/Sales Price Ratio 88% - Market Volume: $7,438,075
02/2008: List Price/Sales Price Ratio 94% - Original List Price/Sales Price Ratio 88% - Market Volume: $4,710,750
03/2008: List Price/Sales Price Ratio 95% - Original List Price/Sales Price Ratio 92% - Market Volume: $8,565,099
04/2008: List Price/Sales Price Ratio 95% - Original List Price/Sales Price Ratio 92% - Market Volume: $11,541,640
05/2008: List Price/Sales Price Ratio 97% - Original List Price/Sales Price Ratio 93% - Market Volume: $11,863,250

 

[CANative]

When the unsold inventory reaches a level which would require more time to sell off than current reasonable exposure time. (example: Average or typical exposure time of about 180 days. Current sales volume about 12 sales per month with 150 actives and half a dozen pendings. If no change in the market it would take 450 days or so to sell the standing inventory instead of 150.)

 

[Tim The Enchanter]

MLS download to spreadsheet.
And Bob's your Uncle.

Fine print. Spreadsheet may require some
assembly and/or construction.