How is your town fairing in this crazy real estate market? The best way to assess the market is to take a look at the absorption rates as indicated in the table below. You can also click on each town name to view the current real estate listings for each town.
|Town||6 Month Listings Taken||6 Months Listings Sold||Inventory||Sales/Month||Absorption Rate|
First, what is an absorption rate? An absorption rate in real estate tells us how long it would take to sell of the entire existing inventory in a given market, based on the current rate of sales per month. This is used to measure how healthy a market is, and who has the advantage. Buyer or seller?
6 months is the benchmark. 6 months is the number that represents a healthy, balanced market. If we have more than 6 months of inventory it’s considered a buyer’s market and we will start seeing some reduction in prices, seller concessions or sellers paying some closing costs, engaging in more inspection repair requests. Under 6 months we have a seller’s market. Multiple offers, over asking price offers, appraisal contingency waivers and buyers taking homes as-is just to make sure they don’t lose the property.
To calculate the absorption rate, first we need to find the average amount of sales per month. (Total listings sold over last 6 months divided by 6.) Then we take the current inventory and divide by “Sales/month.”
So let’s start with the numbers from the previous page. Most municipalities in Rockland have an absorption rate less than 2 months. Nanuet currently has .667 which translates to about 3 weeks. In other words, if you are looking at a home for sale in Nanuet today, chances are it will not be available in another 3 weeks.
Look at Bardonia. Bardonia currently has an absorption rate of ZERO since there isn’t even a single home for sale in Bardonia at the time of this report.
We can see that we are still at historically low absorption rate levels. Now you’re probably getting headlines across your browser and news feeds saying home prices are dropping, the market is struggling. And that may be true elsewhere but these calculations here are not opinions.
This is pretty clear cut data that the sellers still have the advantage.
One thing that struck me as odd right off the bat was Piermont and Palisades. How could Piermont, one of the more sought after areas, often with amazing river views, have one of the higher absorption rates in the county?!? I dug deeper into the data to discover that of the 7 homes currently for sale in Piermont, 4 of them are at or above an asking price of $1,000,000. Palisades currently has 13 homes for sale and an astounding 7 of them are asking over $2,000,000. 4 of them are over $4,000,000! We know that the increase in interest rates over the past year has affected the higher price homes more dramatically than lower priced properties. And that is the perfect segue to the next graphic- Absorption rate per price point. In other words, how quickly are homes selling in the 400,000’s, 500,000’s and so on.