Click on the chart above to enlarge.

This morning, I received an email from Mira who asked me how does one calculate the absorption rate for Boston condos ( the  above example is the formula that I use). The reason she asked, she is thinking of listing her Back Bay condo for sale and was interested on what the absorption rate is for the Boston Back Bay area. So using the calculation formula above I came up with these figures:

Number of Back Bay condo listings on MLS = 275. Please note I’ve included under agreement/pending sales in this number since they haven’t closed yet.

The number of Back Bay condos that sold last month was 11.

11 sales x 12 months = 132.

52 weeks in a year = 2.5 Back Bay condo sales per week.

Take the 2.5 Back Bay condos that sold each week and divide  by the number of active listings (275), this equates to 110 weeks which would be the Back Bay condo absorption rate.

So what is considered a Buyers or Sellers Market in Boston:

  • “Boston Normal Market” conditions exist when the absorption rate is 5-7 months.
  • “Boston Sellers Market” conditions exist when the absorption rate is at 1-4 months.

“Boston Buyers Market”  exists when the absorption rate is higher 7+ months.

 $839,000

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