The absorption rate measures how many months worth of homes are currently on the market. It is calculated by dividing the total number of homes for sale by the average number of homes sold per month.

The rate is important because it tells you how quickly inventory is moving in a given area. It tells you if you are in a buyer’s market, a seller’s market or balanced market. If you are selling, the absorption rate can help you determine how aggressive you can be with your list price. If you are buying it will tell you how much (if any) negotiating power you have when making an offer.

The rule of thumb is that is that 6 months of inventory represents a balanced market neither heavily weighted towards the buyers or the sellers. Anything less than 6 months of inventory represents a seller’s market, noting that there is higher demand that there is a supply.

I gathered a little of data (just enough to be dangerous) for three South City zip codes.

• 63116 includes Tower Grove, a bit of Dutchtown and Holly Hills.
• 63104 includes Lafayette Square, Compton Heights, Fox Park, McKinley Heights and a bit Tower Grove East.
• 63118 includes Tower Grove East, Benton Park, Benton Park West and Gravois Park.

63104

• 2 bedroom home: 26 priced between $64,900-$349,500
• 3 bedroom home: 33 priced between $109,900-$529,900
• 4 bedroom homes: 12 priced between $169,900-$750,000
• 5 bedroom homes: 8 priced between $149,900-$745,000
• 6+ bedrooms: 3 priced between $249,900-$725,000

• 2 bedroom homes: 10 priced between $71,000-$193,000
• 3 bedroom homes: 25 priced between $65,000-$599,000
• 4 bedroom homes: 8 priced between $59,900-$750,000
• 5 bedroom homes: 1 priced at $255,000
• 6+ bedroom homes: 0

• 2 bedroom homes: 20 priced between $29,000-$260,000
• 3 bedroom homes: 24 priced between $35,000-$450,375
• 4 bedroom homes: 11 priced between $85,000-$675,000
• 5 bedroom homes: 2 priced between $398,000-$419,900

63116

• 2 bedroom homes: 89 priced between $37,890-$280,000
• 3 bedroom homes: 50 priced between $32,500-$312,326
• 4 bedroom homes: 13 priced between $48,600-$409,900
• 5 bedroom homes: 2 priced between $139,900-$295,000
• 6+ bedrooms homes: 1 priced at $399,000

Under Contract: 96 total homes have gone under contact in the last 90 days

• 2 bedroom homes: 43 priced between $9,900-$212,500
• 3 bedroom homes: 42 priced between $54,000-$349,900
• 4 bedroom homes: 9 priced between $49,000-$379,900
• 5 bedroom homes: 3 priced between $200,000-$371,900
• 6+ bedrooms homes: none

Sold: 142 homes have sold within the last 90 days

• 2 bedroom homes: 65 priced between $10,000-$211,000
• 3 bedroom homes: 57 priced between $38,000-$384,000
• 4 bedroom homes: 16 priced between $19,200-$484,000
• 5 bedroom homes: 2 priced between $37,000-$345,000
• 6+ bedrooms homes: 2 priced between $245,000-$440,000

63118

In 63118 there have been 68 sold homes in the last 90 days. On average 22 homes sold per month. There are currently 67 active listings which means there is a 3 month supply of inventory on the market.

Active: 67 currently listed as of May 11th 2016

• 2 bedroom homes: 17 priced between $10,600-$247,000
• 3 bedroom homes: 34 priced between $3,900-$324,900
• 4 bedroom homes: 9 priced between $24,900-$359,900
• 5 bedroom homes: 5 priced between $43,900-$545,000
• 6+ bedrooms homes: 2 priced between $134,900-$155,000

Under Contract: 47 total homes have gone under contact in the last 90 days

• 2 bedroom homes: 14 priced between $15,400-$197,000
• 3 bedroom homes: 25 priced between $13,000-$415,000
• 4 bedroom homes: 8 priced between $26,000-$399,900
• 5 bedroom homes: none
• 6+ bedrooms homes: none

Sold: 68 homes have sold within the last 90 days

• 2 bedroom homes: 14 priced between $6,000-$226,000
• 3 bedroom homes: 37 priced between $23,000-$336,000
• 4 bedroom homes: 15 priced between $25,000-$370,000
• 5 bedroom homes: 5 priced between $268,000-$292,000
• 6+ bedrooms homes: none

This market is heavily weighted towards the home seller. Houses are selling in limited number of days, many on the first day with multiple offers. It is clear that there is more demand than there is active inventory.

If you are considering selling, now is definitely the time to do it.

If you want to work with educated professionals who have a deep understanding of the market, years of experience and proven strategies, then our team is the team to call.