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Absorbing and Understanding Absorption Rate
 
Absorption Rate is defined, calculated, and formulated in many different methods leading to interpretation variations.
 
It only becomes useful to the clients, prospects, or readers if the data is simple and comprehensible.
 
Giving them a presentation with three decimal places or a number less than one is not easy to comprehend: See the example below that I extracted from a realtor.com website.
 
 
 

 
The example above could have been best presented by dividing 33,163 (Number of Sold Homes) by 304 days, giving a result of 109. This means that the average number of homes sold each day is 109 instead of stating: 1 home is sold every .00917 days.
 
Using the current inventory or number of active homes in the above example of 14,156 and the average sold homes per day of 109, it will take 129.87 or 130 days to deplete the current inventory provided there are no other listings that come up on the market and the current market pace remains the same.
 
 Moreover, there is no short-cut in calculating Absorption Rate.
 

 
 
 
The formula above does not yield a true picture of the time-frame or period to deplete the total inventory ... more

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