Todd's Real Estate Blog


What makes this a Buyer's Market in Mission Hills and Hillcrest? Its the Market Absorbtion Rate!

Hi everyone. I wanted to give you some quick numbers on the Mission Hills, Banker's Hill and Hillcrest detached home market.  Ok, I know you are asking, what the heck is market absorbtion rate?  Simply defined, it's the amount of time it takes for the current inventory to be sold or absorbed by the market. Example:  If there are 100 homes on market right now AND no new properties came on the market, the Market Absorption Rate is the amount of time it would take to sell all 100 homes. 

For the entire zip code of 92103 for ALL Detached Homes the current Absorbtion Rate is a whopping 9 months.  That means the average Days on the Market for detached homes is 267 days. 

"Normal Market" conditions exist when the Absorption Rate is between 5-6 months.

"Sellers Market" conditions exist when the Absorption Rate is lower.  (1-4 months)

"Buyers Market" conditions exist when the Absorption Rate is higher.  (7+ months)

You might be asking yourself,  "Why does the MLS report a much lower number for Days on the Market?

Because the MLS calculates the average DOM as the average days on market for the listings that actually sold.  What it leaves out of its calculation altogether are homes that were withdrawn, listings that expired, listings that were withdrawn for a day and then re-listed to restart the clock, or those that were never put in the MLS until they sold (like new construction where they might list only one home in a subdivision, but actually have 20 for sale).  And all of those affect the reported DOM.

As you can clearly see its a VERY GOOD Buyer's Market. This is an overall average for EVERY detached home that has SOLD in the last year in the zip code of 92103.  You think this number is high?  Get this, the homes SOLD above $1,000,000 in our neighborhood have a Days on the Market average of 754 Days. If you own a luxury home in Mission Hills, Banker's Hill or Hillcrest, please give me a call and I'll show you how we can decrease these numbers in your favor and get your home SOLD in the shortest amount of time possible. 


Comment balloon 3 commentsTodd Armstrong • September 06 2009 09:16AM


Good post and I do enjoy reading about other markets. It also gives me some ideas I may be able to use here. So thank you for the time you put into this

Posted by Charlie Ragonesi, Homes - Big Canoe, Jasper, North Georgia Pros ( over 11 years ago

Its amazing to me to see how much the data in the MLS is skewed. Almost every single market in America will have a huge disperity between the MLS DOM versus the Actual DOM as calculated using the market absorbtion rate. 

Posted by Todd Armstrong (Pacific Sotheby's International Realty) over 11 years ago

Good information.  Thanks for taking the tinme to calculate and post.

Posted by Edward & Celia Maddox, EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD (The Celtic Connection Realty) over 11 years ago

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