East Bay Market Insights: Decoding MAR

The real estate market is constantly changing, and it can be challenging to keep up with the latest trends and data. Market Absorption Rate (MAR) is a crucial metric that measures the speed of inventory and provides valuable insights into the overall health of the real estate market. In this blog post, we will explore what MAR is, how it affects the real estate market, and what trends we are seeing in the East Bay area. Whether you're a buyer, seller, or real estate agent, understanding MAR can help you make informed decisions and navigate the complex real estate landscape. So, let's dive in!

What is Market Absorption Rate (MAR) and what does it tell us about the real estate market? 

MAR measures the speed of inventory and is calculated by using the number of active listings per month divided by the number of sales. For example, if there are eight homes on the market and four homes sold in January, the MAR = 8/4 = 2, which means it would take two months for the current inventory of homes to sell.

A low MAR value, such as the one observed during the pandemic, indicates that homes are being sold faster than they are being listed, leading to a seller's market. This could lead to higher home prices, multiple offers, and bidding wars among buyers. On the other hand, a high MAR value indicates that there are more homes for sale than buyers, leading to a buyer's market. In this scenario, buyers have more leverage to negotiate lower prices and other favorable terms.

Redfin 5-year average showing national vs California

Looking back at the US and California-based MAR data from 2019 to the present, the peak inventory was in January of 2019 when there were four months of inventory available. This cratered after the pandemic, with less than two months starting in July 2020 and lasting through May of 2022. The speed of sales has gradually increased back to three months in November of 2022...still well below the 6-month threshold, which is considered to be a balanced market between buyers and sellers.

By tracking the MAR over time, we gain insights into the market's supply and demand dynamics, as well as the overall health of the real estate market. It is essential to note that the MAR varies by location and property type, so it is crucial to analyze the data at the neighborhood level to gain more accurate insights.

East Bay Trends

For our East Bay neighborhoods, the trends were similar but tend to run slightly below the CA and US averages. The average MAR for Berkeley over the same 4-year period was 1.19 months, hitting a low of 0.33 months in December of 2021. While the inventory is trading slower than during the peak pandemic years, our current market is still moving 1.6x faster than the slowest of the seller's markets in 2019. Listings continue to move quickly, particularly in the hottest inner East Bay markets. Our most recent Kensington listing, for example, received seven offers and went pending after only 12 days on the market.


Source: MAXEBRDI MLS • 2022 MAR graph for El Cerrito

Overall, the MAR is a useful tool for monitoring the real estate market's performance and identifying trends that could impact homebuyers and sellers.

If you have questions about what it all means for buying or selling, please reach out to Josh. He loves this stuff!


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