Marin County Absorption Rates

While those of us living in Marin (Mill Valley, Tiburon, Belvedere, Ross, Kentfield, San Anselmo, San Rafael, Greenbrae, Corte Madera, Larkspur, and Novato) are often well-heeled, we are not immune to the effects of rising interest rates and the overwhelming barrage of mostly negative media coverage of the “state-of-the-market.” While prices in much of Marin have continued rising incrementally (not so in Novato), the outlook for the future is colored by the insulated nature of the Marin real estate market and the fortitude of sellers when it comes to holding out for more money.

While the number of homes put on the market has remained roughly equal to that of last year, sales are down about 20%. As a result, the inventory of homes on the market for most of this calendar year was dramatically increased from last year.

The absorption rate of homes on the market is a telling statistic. It tells us, given the number of sales in the past month, how many months’ worth of homes are currently on the market (assuming the number of sales remains constant). As with all statistical analyses of home sales data, it is imperfect. But, it gives us a good idea of just how well the housing market is doing in a particular neighborhood.

The following is a brief rundown of absorption rates in Marin County as of December 5, 2006:

Current Absorption Rates (single family homes):

When the absorption rate is under 3 months, you can assume the market favors the sellers. Of course, in today’s market, sellers have modified their expectations and begun to lower their asking prices and have been more flexible on terms. When the absorption rate is between 3 to 5 months, you have a more balanced market. Once you get above 5 months, however, prices make meaningful strides downward.

*Note: If your town’s absorption rate is not sampled above, or if you would like information on condominiums, please call Kyle at (415) 350-9440.