A review of the absorption rate is a fair indicator of a real estate market's performance

I’m commonly asked "How’s the residential real estate market?" Always, I’m happy to respond because the least reliable place for real estate news tends to be the national media.

Residential real estate is a local business and a local market. The broad swings in market appreciation and depreciation found on both coasts usually does not occur here. Moreover, the Chicago Metropolitan economy tends to be diverse. This is unlike places like Detroit which are exposed to the dynamics of one of a few industries.

While I constantly monitor specific market data in all of the sub-markets in the Hinsdale, Clarendon Hills, Western Springs, Westmont, Burr Ridge, Elmhurst, Oak Brook, Willowbrook, La Grange and Downers Grove areas, I thought that it would be more digestible to focus on a single area and two separate price ranges for the annual review of absorption rates.

Immediately below, you will see the absorption rates (as measured by the number of accepted contracts on a monthly basis for detached homes only) for the 2004, 2005, 2006 and year-to-date 2007 real estate marketing years in Hinsdale. I have provided data for all detached houses and a separate number for detached houses which have sold for more than $2,000,000.

2004
All detached homes: 33 units per month
Homes over $2M:  2.2  units per month 

2005
All detached homes: 30  units per month
Homes over $2M:  2.5  units per month

2006
All detached homes: 22 units per month
Homes over $2M:  1.4  units per month

2007 Year-To-Date
All detached homes: 19 units per month
Homes over $2M:  2  units per month

This information was extracted from MLSNI data which is considered reliable, but not guaranteed.

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