Calculating Housing Absorption Rates - The Easy Excel Way!

I have Excel sheets set up to do comparisons of days on market, average sales price and every other statistic on housing I can think of that I may every need for real estate sales or appraisals.  You can see the results of a recent housing analysis of the Athens, Georgia area on my blog sites All About Athens GA or GA Real Estate Appraisal.  Here is the Excel worksheet I use, that you are welcome to utilize.

Or read on to do it the manual way.....This is a simplification of the process: Choose your period (typically last twelve months, but I recently had a lender ask for a 3 month absorption rate);

• Find the total number of sales for the area (this can also be narrowed by price range, it really depends on the type of analysis);
• Find the number of active listings for the same parameters; divide the active inventory by the sales. 
• There is your absorption rate.

This can be really simple or get very complex, depending on the need. 

• Then to determine the marketing time and if there is an oversupply, take your absorption rate 
• And divide your current listings in your market area by the absorption rate. 

For example, during 2006 in zip code XXXXX,  the MLS shows 450 sales.  450/12 = 37.5 sales per month.  The MLS shows a total of 372 active listings in zip XXXXX.  372/37.5 = 9.9 months supply of active listings in  the MLS indicating an oversupply and a marketing time exceeding 6 months.

Having these statsistics on housing available to the public recently led to several media opportunities including these quotes on Athens Georgia Housing and speaking to 30+- mortgage loan officers last Friday at their monthly luncheon...just one more way to differentiate yourself from the competition.

UPDATE:  Shortly after posting this it was brought to my attention that there is an excellent post by Gary Bolen  on this topic also.  His post How to Use the Absorption Rates in Your Lake Tahoe Real Estate Blog is marvelously detailed!

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Michelle@SuccessRealtyGa.com      

For relocation, real estate and general information (including school information, crime statistics and more)about Athens, Georgia and the surrounding area including Madison County, Jackson County, Barrow County, Oconee County and Oglethorpe County, Georgia, see our other posts on our community blog at All About Athens GA.