I’m sharing our latest market update as well as how to come up with the absorption rate for your neighborhood.
Recently, I was analyzing what happened in 2019 in our real estate market. I was examining all the statistics, getting a feel for how 2019 went, and how it could impact 2020. I came across a few essential facts that I felt you should know.
The absorption rate, or inventory level, is the measure of how many homes we have for sale versus how many we’re selling per month. In 2019, the absorption rate ebbed and flowed between 3.8 and 3.2 months. To take this measurement for your neighborhood, you would want to look at the number of active listings against the number of homes sold in the previous 6 months (averaged). For example, if there are 10 active listings and 30 houses sold (over 6 months), you divide 30 by 6 which equals 5 per month. Then divide 10 by 5 to give us 2 months of inventory.
Currently, we have 3.2 months of inventory, which means in about three months, all of our current listings will be sold (not considering those pulling their houses off of the market). A few other factors come into play, but that is the basis for these figures. This low number is great for sellers but can be tough for buyers. As a buyer, this means a property might fetch multiple offers when it comes on the market.
The average 30-year fixed-rate mortgage is currently in the mid 3’s, which is going to fuel the market. As long as mortgage rates are that low and inventory is low, prices won’t slow down much.
I’m curious and excited to see what happens in 2020. Many factors can change up these numbers, so we’ll see how our real estate market ebbs and flows as we move through the year.
If you’re wondering what your home is worth, what you can get for the money as a buyer, or you just want to have a conversation about any of these statistics, feel free to call or email me. I would love to catch up!