Another exciting index to follow is the absorption rate, which is an indicator that we watch very carefully every month. The absorption rate is simply total available homes for sale versus number of pending sales. The available home for sale is the supply of homes and the pending sales is the demand for homes. In January ’09, there were 134 homes listed for sale and there were only 14 pending sales. So the absorption rate is about 10.45%. That was the highest absorption rate we had in the past several years. Last month, there were 51 homes for sale and 33 homes were under contract or pending sales. The current absorption rate is about 64.71%. This is a dramatic difference considering the fact that the unemployment rate in Silicon Valley is still above 11% and the news media continued to report lack of confidence in consumer spending. We just don’t see that in the Cupertino housing market! With such high absorption rate, we believe the home price will move up as there is more demand for homes and low inventory situation continues.
If you like to read the complete 21 page market statics report or, if you like to find out what is the value of your home, please send us an email or give us a call. We welcome your questions and comments.