(January - August 2007)
ABSORPTION RATE is simply the pace at which homes are absorbed by the market. By measuring the number of homes in inventory and the number of homes sold, we can estimate how long it will take to sell the homes currently available.
The first chart shows the number of properties for sale in Anne Arundel County and how many properties sold and settled. The absorption rate, on the second chart, is calculated by dividing the number of sold properties by the number of homes in inventory. Any percentage above 50% means that more homes sold than didn't; if the percentage is less than 50%, fewer than half of the homes on the market sold.
Let's look at this example: If there were 1000 homes on the market, and 250 sold, that would indicate 25% of available homes sold. Another way of looking at it would be to say that there was a 4-month inventory of homes on the market, if homes continue to sell at the same rate.
WHAT DO THESE CHARTS MEAN TO YOU? Homes are continuing to sell in Anne Arundel County, but the listing inventory is drastically out of synch with the number of buyers. In order for any property to sell under these circumstances, it MUST be priced right! Overpriced homes don't stand a chance! They will languish on the market for month after month and, as prices are forced lower by market conditions, homeowners will have to make price cuts later, possibly far below today's "right" price.
Based on the data available. it would take more than five months to sell of the homes currently on the market - assuming no new listings become available.
Source: Metropolitan Regional Information Systems, Inc. (MRIS). Chart by Margaret Woda. All information deemed reliable but not guaranteed.
More Anne Arundel County MD Real Estate trends:
Comments(8)