Numbers don’t lie. We wish we could say the same for headlines. In our quest for transparency, we’re going to be bringing you monthly updates on the health of the real estate market with our new series Absorption Rate Analysis. We hear a lot about “fewer homes hitting the market”, but this hasn’t been our personal experience. We still see a very healthy market in the neighborhoods we service. And though we’ve been telling you this for months, we’ll let the stats speak for themselves. 

In Long Beach Zip Code 90815 there are 32 active and 33 homes sold in September with an average 7 days on the market, at a medium selling price $1,010,000.  That's an absorption rate of 97%. Anything over 20% means a healthy market.  

Why Does Our Data Only Account for Single Family Homes?

Before we dive into the absorption rate stats, we want to clarify that this data is only counting single family homes. We haven’t included condos or townhomes as part of the list. Why? Because we feel this gives a more accurate representation of the market. The majority of buyers in the neighborhoods we service are in search of single family homes. Therefore, these made up the focus of our data collection efforts. 

What is an Absorption Rate? 

Speaking from the real estate context, an absorption rate offers a percentage illustrating the amount of homes sold over a set period of time. We can use this figure to gauge whether a market is tipped in favor of the buyer or the seller. For simplicity’s sake, we’re going to be reporting the absorption rate on a monthly basis. And how do we find that figure? The formula is basic enough. To calculate absorption rate, we divide the total number of homes sold (over a month for our purposes) by the total number of homes on the market. 

The Threshold for a Healthy Seller’s Market

According to Investopedia, a 20% absorption rate indicates a healthy seller’s market. In this kind of housing market, homes sell rapidly. An absorption rate below 15% indicates a buyer’s market in which homes often stay on the market for a lengthy amount of time. Despite reports of a sluggish housing market due to rising interest rates, our August absorption rates paint a different story. In fact, we don’t have a single neighborhood dipping below the 20% mark, indicating a strong seller’s market down the line.