Real Estate Blog - MARKET ABSORPTION RATE FORMULA

Home : Blogs : Gail MacMillan - CRS, e-PRO, GRI ~ Titusville FL Real Estate Brevard County : Titusville FL Real Estate by Gail MacMillan

MARKET ABSORPTION RATE FORMULA - Do it the Easy Way

A lot of people seem intimidated by the absorption rate which is used to determine
how long it might take real estate in a given area to sell. Below is the formula I use
which comes right out of the relocation industry. Typically the number of sales in a 6
month time frame is used along with the number of active listings in a market area.
Here's the formula, after trying it a few times, you'll wonder what all the hoop-la
is all about.

INVENTORY

The total number of houses for sale within a defined market area

ABSORPTION RATE

The rate at which homes will sell within a given period of time or unit sales per month

EXAMPLE

23 sales in 6 months ~ divide the # sales by the # months = 3.83 sales per month

MONTHS OF INVENTORY

Time required to sell all existing homes ~ divide inventory by absorption rate (# sales per month)

EXAMPLE

113 houses in current inventory divided by 3.83 sales per month = 29.5 months of inventory.

In my particular market area, unfortunately, this is not an unusual number.
If you find this formula useful, please pass it along :-)

I can help you find your Home Sweet Home in Florida ~ TODAY!

Home Sweet Home Florida Realty, Inc.
At Home With Diversity (AHWD)
Certified Residential Specialist (CRS)
e-PRO Internet Certified (e-PRO)
Graduate Realtor Institute (GRI)
Titusville, Florida
Cell: 321.544.6808

HSH Logo

www.HomeSweetHomeFlorida.com
http://activerain.com/blogs/homesweethomeflorida

Posted by Gail MacMillan - CRS, e-PRO, GRI ~ Titusville FL Real Estate Brevard County on 09/20/2008 02:02 PM

Comments (8)

Titusville FL - Market Absorption Rate Formula 9/08 in the Regional (Localism) Channel

absorption rates, titusville fl real estate, brevard county fl real estate, titusville fl homes for sale, brevard county homes for sale

Originally posted at: My Titusville FL Real Estate Blog: MARKET ABSORPTION RATE FORMULA - Do it the Easy Way

This post has been included in Florida Information Brevard County, FL Information
Post is included in group: Localism Success and Accountability Group
Post is included in group: Local Expert
Post is included in group: Addicted to Active Rain
Post is included in group: Active Rain Newbies

8 Comments on MARKET ABSORPTION RATE FORMULA - Do it the Easy Way

SEP

2008

Works for me Gail. What's that they say keep it simple stupid.

Very simple explanation for a pretty complicated concept. Thanks for the post, I will make sure and use this with my clients too when pricing their property

Thank you for sharing this... I, too, will use this with my clients...

Hi John - KISS me anytime ;-)

Hey James - it really is simple, and very effective on listing appointments. Good luck!

Thank you both for stopping by.

Thanks Sherry - In the fight against over-priced listings I have not found a more effective tool when used in conjunction with statistics from the MLS. Thanks for dropping by and commenting.

SEP

2008

That sure makes it easy! Thanks!!!!

The AR in my market is around 50+ months...way too much inventory...Kelly Willey

Hi Sue - Glad it works for you - Like John said above, the KISS formula is usually the best. Have a great weekend.

Kelly - 50+ months is outrageous, that's the worst I've heard so far. How can you begin to cope with numbers like that. I'm guessing prices in the KEYS must be down 40-50%, what are finding?

This blog does not allow anonymous comments