Calculating and Analyzing Absorption Rate

Have you ever wondered how fast homes are selling in your neighborhood right now? There is a way to measure it that will tell you which way the market is heading. Absorption rate is the measurement of the rate of sales in any neighborhood. For example, if 50 homes are sold in a months period, and there are 100 homes for sale in the market place, the absorption rate is 2; meaning that there are two months of inventory currently in the marketplace.

A balanced market of buyers and sellers is defined at 5-6 months of inventory. A 2 absorption rate means that the sellers have the advantage. A 9 means that the market favors the buyers and sellers can expect to discount their property values in order to sell their home. Included is a chart that show how the absorption rate can also indicate if the market is appreciating or depreciating.

For specific information on your neighborhood please contact me for a free absorption report.

Posted By: Brad Sears