Knowing the absorption rate is a great way to become more informed on the current real estate market conditions in a particular area.
In simplistic terms, it is a mathematical equation that tells you the amount of time it will take for a specified set amount of properties to be absorbed under current real estate market conditions.
Generally speaking, the higher the number, the more of a buyer’s market and vice versa for a seller’s market. An absorption rate over 6+ months would be considered a buyer’s market, 3-5 months a normal market, and under 3 months a seller’s market. Based on this, we have not seen a seller’s market in 2 years.
I calculate the absorption rate for Big Bear from a monthly perspective, though is can be looked at from a weekly or yearly perspective as well. I take the number of properties for sale in a particular area or price range, and divide that by the number of closed sales in the same area or price range the month before (see below for this month’s).
That said, there were a total of 49 residential sales in Big Bear during the month of January 2009. Currently, there are 917 residential properties for sale, which translates into an absorption rate of 18.71 months, about three months less than December, 2008 number. This means it would take just over a year and half for the current inventory on the market to be absorbed, assuming nothing else comes on the market for sale, and we know that is not going happen.
See below for the absorption rate breakdown by area & price range for the Big Bear real estate market during Jan. 2009.
Absorption Rate By Price Range
|Price Range||Residential Properties On The Market||Residential Sales Last Month||Absorption Rate – # Of Months It Will Take To Sell|
|$300,000 & below||446||34||13.12|
|$300,001 to $500,000||252||8||31.5|
|$500,001 to $800,000||106||5||21.2|
|$800,0001 to $1,000,000||46||0||N/A|
|$1,000,001 & above||67||2||33.5|
Absorption Rates By Area
|Area||Residential Properties On The Market||Residential Sales Last Month||Absorption Rate – # Of Months It Will Take To Sell|
|Big Bear Lake West||41||2||20.5|
|Big Bear Lake Central||91||5||18.2|
|Big Bear Lake East||84||2||42|
|Big Bear City||195||9||21.67|
Properties priced under $300,000 are selling the best along with those in the $500,000 to $800,000 price range. Properties priced in the $300,000 to $500,000 price range, and those over $800,000 are not selling as well.
In fact, there were only 2 sales of residential properties in the whole month of January in the $800,000+ price range. When you have 113 homes for sale in Big Bear that are priced over $800,000, that equals an absorption rate of 56.5 months (that’s 4.5 years!) for those type of properties. Of the two sales, both sold for $1,150,000. One of them was located in Meadowbrook Estates and the other was on the lakefront on Big Bear Lake.
From a location perspective, the properties in Erwin Lake, Sugarloaf, Whispering Forest, Big Bear Lake Central, and Moonridge areas sold better when compared to Fox Farm, Big Bear Lake West & East, Big Bear City, Lake Williams, Baldwin Lake. Last month these areas were almost reversed. This just goes to show that the buyers today are looking for the best values for their money, not necessarily the best location.
These numbers do change on a monthly basis. One month a particular area may perform better than others and then not so good the following month. Click here if you are interested in seeing the Big Bear market stats & absorption rates for Big Bear from previous months.