Absorption rate, or sales to listings ratio is not often talked about although it's very important. So important that after the US crash in 2009 the government told appraisers that this must be considered in property valuations.
It's pretty simple and it's the number of sales in a month and divided by number of listings. So the higher this number gets the quicker inventory is getting eaten up. 100% means everything is selling. In White Rock, anything over 20% is considered a pretty balanced market which also means 5 months of inventory if nothing else comes on the market.
In 2007 and 2011 when we saw a spike it was at 30%. This spring when the market was crazy it hit close to 60% or one and a half month of inventory! No wonder people were rushing to buy a house and bidding higher than the next guy. The impression was there was going to be nothing for sale next month!!
At the end of November we’re sitting at 20%. Yes, it’s a huge drop but we were also at a ridiculous levels.