Understanding & Using Absorption Rate in Residential Real Estate
July 29, 2010
What exactly is Real Estate Absorption Rate?
Absorption rate is the ability of the real estate market to “absorb” or sell the current active inventory and new listings coming on the market. It also reflects the number of months supply of inventory currently on the market. It is calculated by dividing the total current active inventory by the average number of home sales per month over the past year.
So for example, in Boston’s Back Bay neighborhood there are currently 304 condominiums available to purchase according to the MLS (Multiple Listing Service) There were 450 condominium sales in the Back Bay over the past twelve months. 450/12 months = 37.5 = average number of home sales per month over the past year.
So…
Active inventory: 304 condominiums
Average number of home sales per month over the past twelve months: 37.5
Months supply of inventory: 8.1 months. *Note this figure is through the end of July while the chart below reflect through the end of June.
In other words under current market conditions it would technically take 8.1 months to sell the current inventory sitting on the market.
What does the Absorption Rate indicate?
- A declining figure indicates that there is a large pool of active buyers acquiring homes on the market.
- A rising figure indicates that there is more inventory available than there are buyers in the market.
- As inventory supply decreases, the absorption rate should also decrease providing that the average home sales per month do not change.
What Factors Influence the Absorption Rate?
While there are many factors that can influence the absorption rate, here are a few:
1) Market pricing – Are prices increasing or decreasing?
2) Inventory – Is supply increasing or decreasing?
3) Credit Market – Is it easy or difficult to get financing?
4) Consumers – Is there a demand for homes based on either need or pricing?
Local Housing Data – Months Supply of Inventory
Check this out!
What are the Advantages of Knowing the Absorption Rate?
For Sellers
Assists in making the initial pricing decision.
Balances their expectations with reality.
Tells them if it is a Buyer’s or Seller’s Market.
For Agents
Gives solid evidence when presenting pricing proposal.
Helps to guide seller towards the right price.
Helps to manage seller’s expectations.
Helps to determine whether it’s a Buyer’s or Seller’s market.
Burger and Fries Night
July 20, 2010
So tonight is fat night. Not P-H-A-T but fat. As in fat loading for this Sunday’s race which means burger and fries. It’s one of the perks of trying to follow a very good diet throughout the training schedule. Sunday races mean you eat the meal on Tuesday night; Saturday races on Monday. Either way, I get to look forward to this. 
Tonight we’re going to Radius for their famous “Radius Burger”. Okay so I’m fine w a regular burger at say the Paramount or Four Burgers but we’ve never tried it so there you go.
Can’t wait!
Ulnar Nerve Entrapment?
July 19, 2010
Well as of last Friday it appeared as though the neurosurgeon I had met with at the Brigham and Women’s Hospital in Boston was confident the numbness and tingling I had been experiencing in my two small right fingers corresponded directly with an ulnar nerve entrapment. However, after having had an EMG this morning to determine the specific location of the cause, it appears a bit undetermined.
The nerve stimulation testing I had done pretty much revealed levels of response within the normal ranges; on both arms. So, the other potential option is that something is going on with my C8 disc; a possibility considering I’ve had sharp pain at the top of my spine on very long rides riding in the aero position
. I’m still scheduled to see a hand surgeon tomorrow morning to discuss the possibility of getting a cortisone injection to get me through this weekend’s Lake Placid Ironman, however, it’s not looking as though that will do anything significant.
I purchased a type of elbow pad that will help me become more cognizant of how I’m positioning my elbow as well as cushion it in the event I rest it on a hard surface by accident.
I have to say it’s quite frustrating to have put so much time into training only to be distracted and somewhat affected by a random injury (definitely affecting my sleep).
We’ll see what the doctor says tomorrow.
Condominium Insurance-Get it!
July 19, 2010
A question that I am asked again and again is about condominium insurance. Specifically, what is it and do I need it?
A condominium is very different then a single family home. The typical definition is as follows:
“In a condominium form of ownership a purchaser receives title to a specified unit together with a membership in a community association, and an undivided interest in and rights to use a common area. The purchaser holds the specified unit in fee simple, subject to declared restrictive covenants and conditions. Each unit is like a cubile in space, which is why it is sometimes referred to as “horizontal ownership.” The boundaries, which are described in the condominium plan, include the interior surfaces of the perimeter walls, floors, windows and doors. The ceilings, supporting walls, utility installations, central heating, etc. are common property to be shared by all of the unit owners. Note: Condominium ownership is most commonly represented by a deed. – Real Estate Principles, Donald A. Corb, JD
Essentially, you own a condo within the building and the association holds insurance over the building as a whole. However, as was defined above, the condominium association insurance covers the condominium building, commonly owned property, and liability insurance for the association.
Unfortunately there are many times where that type of insurance policy won’t cover you the unit owner or your own personal belongings – like burglary, a broken water tank from a neighboring unit, or someone falling and injuring themselves while in your unit. 
That’s why you need condominium insurance designed specifically for condo or co-op owners which covers from “studs in.”
This type of policy is required for any property to close in the state of Massachusetts. It protects your personal property and the interior of your unit. You will also have a separate liability protection for bodily injury or property damage to others.
In most cases the homeowner’s association coverage will stop after the exterior walls, meaning again that you the homeowner would be responsible for “studs in” coverage; basically for the interior walls and possibly for fixtures, as well as your personal property and liability.
For a free quote, contact my colleague at William Raveis Insurance, Erica Tennant who can be reached at 617-751-4749.
Swim Across America – Boston Harbor Swim
July 13, 2010
This coming Friday, July 16th, 2010 I will join 83 other swimmers for the annual Swim Across America Boston Harbor swim. This will be the 17th anniversary of this 22-mile relay swim and my third year of participating in the event.
The swim offers a tour of the Boston Harbor and Islands from a very unique perspective; the water. 
The purpose of the swim is to help raise funds that will go to The David Perini Quality of Life Clinic at Dana-Farber Cancer Institute in Boston, MA. Last year we raised almost $300,000.
Essentially there are two boats that will ferry two large groups of swimmers throughout the day beginning from the dock at Rowe’s Wharf in Boston’s Financial District. We will start off at 7:00 a.m. with a number of past Olympic swimmers including Craig Beardsley, Carlton Bruner and Janel Jorgensen who will kick things off in the first wave, jumping off of the pier into the Boston Harbor. In addition to the two larger vessels two Zodiac boats will follow swimmers in the water and shuttle them back to the larger boat when their heat is complete. Each heat consists of a :15 swim which is essentially just over a 1/2 a mile for a steady swimmer.
The two large boats will head out in a staggered position with the Zodiac boats following behind. When one group’s swim is over, the next will jump in from the second boat keeping the pacing going forward. The Zodiac boats will pick up the previous heat’s swimmers who are still in the water and drop them off on their respective boats. This leap-frog procession will continue throughout the day until the 22 mile journey is completed back at Rowe’s Wharf. 
I’ve had such a blast doing this, and luckily the weather’s cooperated the past three years. I am still open to raising money for this event as I’m currently sitting at $1,500 out of my goal of $2,000. You can donate to the cause by clicking on the following link: Swim Across America Thank you in advance if you choose to participate!
Charlie
Four Seasons Place, Boston
July 11, 2010
Built in 1984, the Four Seasons Place condominiums are located just across the street from Boston’s Public Garden. Attached to the Four Seasons Hotel, the building as a whole occupies a beautiful and historically important location in Boston’s Back Bay Neighborhood. When the building was originally constructed the developers of the residences ensured the privacy of the owners and their guests by situating the entrance to the condominiums around the corner from the hotel entrance along with its own drive or Porte-cochere of sorts.
Floors one through seven have hotel rooms and suites, the highly regarded Bristol Lounge, and one of the nicest hotel lobbies in the city. Floors eight through sixteen include the Four Seasons Place residences. Living in the condominiums allows resident owners all of the amenities of this world class hotel, including room service, access to the health club whirlpool and pool, discounts on massage services, notary public services, etc.
In the winter of 2008/2009, the residences went through their first major assessment on the building since it’s inception. The work began with a complete upgrade of the two residence elevators. This included adding a highly advanced computer management system to control both cabs with a type of smart technology that would actually anticipate usage from historical trends; i.e. if one cab consistently would go to the tenth floor every morning at 6:00 a.m. for a resident who was going for their workout, the cab would be there waiting for them. In addition, new cab interiors were added that included updated chandeliers. 
The second portion of this major renovation to the building included a complete renovation of the common areas throughout the building. Each common hallway received new wall coverings, carpeting, crown-molding, paint, doorbells, unit signs, chairs and artwork from such artists as Phillips Jones, andy Nartonis and Michael Compton. 
In addition, new cabling was installed within the walls for all units that included CAT 6 cable, two fiber runs, and an RG11 cable ensuring that the building will be well equipped into the future to handle whatever type of technology becomes available.
There are currently 6 condominiums listed for sale at Four Seasons Place. They range from one to four bedrooms floor plans, with total square footage between 972 sq.ft. to 4,022 sq.ft. Prices on these units run from $899,000 to $8,950,000.
Please contact me directly if you would like to arrange a private showing. Or if you would like to register to search Boston real estate at your leisure go to my website at www.charlieabrahams.com and register for your free access to the Boston MLS system, www.charlieabrahams.com.
Digging Deep – The red or blue pill?
July 10, 2010
Lake Placid Ironman is now two weeks away and today is my second to last relatively “long” workout; a three and a half hour ride in zones 1 (easy, base), and 2 (elevated, tempo), followed by a steady 1 hour run. I only bring this up as it seems as though everyone else on my team is racing somewhere today and tomorrow from sprint races to half ironman distances and I have to go out and slog through the boring miles on my own. I say “relatively long” as the past month of training with consecutive weekly rides of 8 hours and 6 hours respectively makes 3 1/2 hours of riding feel like nothing.
I suppose this is where the digging deep comes into play. When you really don’t feel like doing something but you know that you have to just move forward and get it done. I also think this is what it will feel like come this October when preparing for Ironman Florida in the beginning of November. Add to this my new, nagging condition of what appears to be both arthritis in my neck with some sort of spur growth (from extended time riding in the “aero” position), as well as some sort of pinched nerve in my right elbow which has left me with the feeling of having just slept on my arm (when it falls asleep), but having that all day long, and you’ll know why getting motivated becomes harder and harder to achieve.
Ironman training I’ve learned over the past nine months is really about pushing limits again and again. Steady, methodical and with a purpose, this training gets you to (as Morpheus from the Matrix asks Neo when he offers him the red or blue pill), free your mind and focus on the end prize time after time. It’s what you have to think about when you’re out for your z1 (base), run and people are passing you or on your ride when you just want to stand up and shout “I’m riding by my base heart rate, I normally would be riding much faster!”
I’ve done a complete 180 degree turn in my training protocol since attempting this same Ironman race back in 2002 and 2003 when I finished in 13:43 hours (walking most of the marathon), and not finishing due to a crash, respectfully. THIS is how you’re supposed to train for this type of distance and I honestly can’t understand how anyone would attempt Ironman without putting in these hours. It all will come out on race day, however, and I can only hope that the protocol I’ve been following now for so long (Qt2 Systems), gets me through to reach the goal I would like to achieve; breaking 12 hours.
4 Alarm Fire
July 9, 2010
Forget the news of LeBron James choosing Miami over Cleveland last night, the real news here in Boston was that of a 4-alarm blaze which engulfed the beloved DeLuca’s Market on Charles St., Beacon Hill. According to the owner, Virgil Aiello who was in the basement at the time unloading produce, he saw and heard a loud pop and flash at the electrical box around 7:00 a.m.
According to firefighters it could take months to re-build which Mr. Aiello says he will do, something he did once before following another fire 27 years ago.
For those of us in and around the neighborhood this is tragic news. DeLuca’s is the kind of corner store which everyone loves. A place where everyone is recognized. My wife is in there pretty much every weekend as am I throughout the week. On warm summer evenings the doors are always open. Need a specific ingredient for a recipe but don’t feel like driving over to Whole Foods? Swing by DeLuca’s.
The store itself has been a landmark of sorts in Boston. It’s a family-run business that’s continued for three generations. Joseph S. DeLuca, an Italian immigrant, bought the store in 1919, and it has not left the family since. It is the oldest grocery in Boston, according to its website, and, for many, the kind of place that grounds one of the city’s most storied neighborhoods.
“Firefighters found it difficult to extinguish the fire in the basement, where cardboard boxes, liquor, and produce caught fire, said Steve MacDonald, Boston Fire Department spokesman. They poured water in from the outside until sometime after noon, when they were finally able to gain entry.” – Boston Globe
I took this shot this morning. The aftermath…
Entry-Only Real Estate Companies vs. Traditional Models
July 7, 2010
This afternoon I was sitting in the Registry of Deeds attending a closing for for a single family home I found for a great young couple I’ve been working with on and off for years. During the closing I thought to myself, how strange it is not to see another agent accompanying their clients.
The sellers you see had chosen the route of employing what’s commonly known as an “Entry-Only” real estate company. That is, the company will provide limited resources to the seller; which also means that you get what you pay for.
Many people think that agents do nothing for their commission which couldn’t be further from the truth. In the case of an entry-only agent, however, that is spot on. Their involvement pretty much is limited to setting the property up in MLS, and filling out the appropriate paperwork when required. Conversely, a full-service broker such as William Raveis Real Estate will work with the buyer or seller from start to finish; which means attending the closing and giving the client the peace of mind that everything is fine. Remember, this is one of the largest purchases you’ll ever make, yet for these firms it’s pretty much giving you the consumer nothing and picking up a check in the end, thank you very much.
It irks me sometimes to see how these agents conduct themselves during transactions. My experience has shown that they will have little to no communication with anyone involved with actually selling the home.
Is this really what you want when trying to market your home, particularly in a climate like this? Why limit yourself to a small pool of potential buyers? Food for thought for anyone considering selling their home.
Massachusetts Association of Realtors Reporting Home Sales Down
July 7, 2010
It has been widely known amongst real estate agents here in Boston that since the “first-time home buyers” credit expired, business has suffered. We’re not out of the woods yet by any means. The good news for sellers in Boston is that inventory continues to fall short of demand. Demand, however, is still being controlled from the buy-side. From where I sit, if your home is renovated, has a great location in Boston (Back Bay, South End, Beacon Hill), has parking, outdoor space, you’re sitting pretty. Really. I see properties selling quickly all over the city even in this market; when those conditions are met.
According to the Boston Business Journal:
“The number of single-family homes put under agreement in June to sell in Massachusetts was\ down 16 percent from the same time last year, while condominiums were down 21 percent, the Massachusetts Association of Realtors reported.
In June 2010, 4,354 homes were put under agreement in the state. In June 2009, the figure was 5,153.
The condo figure is 1,689 in June 2010, down from down from 2,127 in 2010.”
