This morning we queried the MLS for a snapshot of our local marketplace in order to understand absorption. Property types in the query include single family homes, condos, TICs, lofts, co-ops, 2-4 unit buildings, 5+ unit buildings, and lots/acreage. It does not include new developments who leave their data out of the MLS. Here is the rundown:
- 518 properties have sold in San Francisco since January 1, 2009.
- There are currently 2,038 properties for sale in the MLS.
- 625 properties are currently in contract.
- That leaves 3.26 months of inventory* out there. Anything less than 6 months of inventory is considered a stable market.
*When we refer to “months of inventory”, it means that if new listings stopped hitting the market immediately, it would take X amount of time for the current inventory to completely sell off. This is also known as an “absorption rate” and it tells us how quickly demand is eating up supply. It is calculated by dividing the number of properties currently for sale by how many properties are currently in contract.
How quickly is demand eating supply?
Now that we have the big view, lets break things down further into property types. For example, what absorption rates are we looking at with single family homes, condos, or TICs? Here are the results:
