I recently completed the 2010 Las Vegas Valley Real Estate Report, which gave us a pretty good picture of what the previous year presented, as well as what we might expect this year in our local real estate market.
When we take a look all those numbers and data, we can really dissect them down to a very micro level… à la we’ve got the numbers, now what do they really mean?
My definition of ABSORPTION RATE is: The number of months it would take, based on current market conditions, to sell the existing real estate inventory.
There are many different ways to try and determine what the actual months-of-supply is- and because the Las Vegas housing market shows to be a 90 day market (one that we refer only 90 days back upon for statistics), we will take a look at a 3 month history of sold properties (including Single Family, Condominiums, and Townhomes).
The chalkboard at the top of this post shows us how the rate is determined. Quite a simple little formula… Take the number of sold properties (within the last 3 months), divide by the number of months (three), and that gives us the ABSORPTION RATE.
To arrive at our months-of-supply, we take the number of currently available properties and divide those by the absorption rate, which will give us our magic number.
THE GREATER LAS VEGAS VALLEY NUMBER OF MONTHS SUPPLY OF HOMES
Calculation after calculation and we arrive at pretty consistent numbers.
Reflecting on the properties available, we’ve got about 4.5 months supply of Real Estate (if nothing new was listed, we would be out of homes in 4 months…). If we threw the homes that were in PENDING or CONTINGENT status into the mix, we arrive at approximately 8 months of inventory (I prefer not to use these listings as they are not “available to purchase”, per se) .
We also need to be aware that specific price points have different numbers. For example, homes priced between $0-$50,000 only have a 3 month supply of inventory; homes priced over 1 Million dollars have a 26.5 month supply.
The 3 Month Data
|# of ACTIVE
|# of ACTIVE/ PENDING/ CONTINGENT PROPERTIES||# of SOLD PROPERTIES (within past 3 months)||ABSORPTION RATE||MONTHS OF SUPPLY|
|15,366||26,189||10,119||3,373||4.5 / 8|
Back in the “old” days of Real Estate, 4.5 months of inventory clearly defined a ‘NORMAL” market. Although we’ve been all-but-normal here in Vegas, I think these numbers fit right into place with the information collected in the Year-End Report. Close-to-the-bottom, and right on track to our “NEW NORMAL”…
What are your thoughts?
*information provided by GLVAR MLS, deemed reliable, not guaranteed.
**Click HERE to read the 2010 Las Vegas Real Estate Report**
Would you like Absorption Rate/ Months-of-Supply data about a specific Las Vegas area, or even your neighborhood? Just let me know and I will be happy to provide this for you!
As always, if you have any questions regarding any Las Vegas Real Estate, or about purchasing or selling any home in the Las Vegas Valley, please give me a call-