Salt Lake County Residential Real Estate Absorption Rate

Absorption rate is simply how long it would take to sell all the homes currently on the market, without any new inventory coming on board.

Keep in mind it is not an exact science, because the supply and demand is a fluid set of variables. 

How do we determine how many homes sell in a month? Because of seasonalities I use a whole year and divide by 12

So once you have the variable of how many homes sell in a month, you simply take the supply and divide it by that.

Now what does that tell us? The general rule is

Below 6 months supply is considered a seller's market
Above 6 months supply is considered a buyer's market 
6 months is considered a neutral market 

So as you can see in the table below that under $400,000 is turning into a seller's market here in Salt Lake County

Now let's not confuse that with the runaway seller's market we experienced a few years back. 

It simply means that prices should not go down and eventually start inching up.

So far Jan '12 has had over 725 sales reported (previous month's sales are typically not finished reporting till about the 15th) compared to January of the previous years Jan '09 452, Jan '10 536, Jan '11 we had 570 sales reported. We should be close to 750 by the time all the reporting is complete. That is a significant increase.

Currently there are just over 14,000 active listings along the Wasatch Front. A few years back that number was well over 20,000

So we are seeing significant increase in sales volume and a significant decrease in inventory.

Not to mention the interest rates OMG. I remember refinancing a 9.5% to a 7% and was happy LOL.

It would appear that the worse in our local market is in the rear view mirror. w00t w00t

My thoughts on the 'Shadow Inventory'