The 60 day absorb rate is a measure of market speed in the same way a speedometer measures the speed of a car. When we are in a car and our speed is steady (no acceleration), we can feel and gather speed impressions by relating to the passing landscape. If we are going slow, say 15 mph, we “know” we are going slow.  The market offers few visual clues as to speed and direction and can be misinterpreted or misunderstood, especially during periods of change. Like a pilot flying at night, the agent must keep his attention focused on his gauges to determine with accuracy the direction and speed of the market. The absorb rate is one such gauge.  If the absorb rate is rising the market is moving toward the seller. If declining, the movement favors the buyer.  If the absorb rate is a low number, the market is converting listing to closings at a slow or low rate.

The last report (May) returned -14%. The current result (-5%) suggests a +9% point market speedup. As a reference, the reader should note the January result was -52% implying the market has been in a positive mode at an accelerating rate and will shortly begin to outperform the 2007 market in terms of closed transactions.

 

In March of 2008, the average rate of closings per day was 7.1. The current rate (through May) is 9.4, thus the market has sped up during the month of May.  If 2005 is set as a reference point, the current market is operating at about 48% of the 2005 market in terms of closed transactions. Expect the market to continue to speed up dominated by distressed sales.

In terms of current market position, the market should be judged as favoring the buyer.

In terms of movement, the market should be judged as moving toward the seller. Key measures are no longer declining and have begun to increase. The level of sale pending is showing good increases. Distribution of Supply/Demand Table continues to tighten. Price, however, moved downward in the month of May.  Current indicators now point to a future limit of median sale price of about $180K. Median sale price will fall below the benchmark $200K level no later than June 15. As in any market, prices may fall then rally and recover. However, this outcome would be a very low probability event in this instance.