Calculating the absorption rate for an area will help you track trends and determine how you want to position your home to get it sold. The information changes periodically as it is determined by number of homes sold as well as number of homes currently listed.
So, what is the absorption rate? The number shows the rate at which the inventory of homes for sale are being sold in a particular area, thus, calling it that area's "absorption rate".
Is the inventory increasing or shrinking? How do I find out? Here's how to calculate the absorption rate:
First, pick the area you want to determine the absorption rate for, then pick a time frame you want to look at, here's an example using 12 months:
Using various months help you determine the trend, I like to look at 12 months, 6 months and 3 months. Next, you:
1. Find out how many homes have sold in that time frame (12/6/3)
2. Divide the # of homes sold by the # of months used.
3. Determine how many homes are currently available for sale.
4. Divide the current active by the # of homes sold/month by the number.
Based on the neighborhood used in the example above, we had about a 7.5 month supply of homes on the market at that time. This helps us develop expectations of how quickly or how slowly a home will sale and how you should position your home to sell!
Let's sum this up, if you have:
If you would like an agent to determine the absorption rate for your area, call me!