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September 2010 Independence Ohio Real Estate Market Conditions Report
September 2010 Independence Ohio Real Estate Market Conditions Report for the Independence, Ohio community in Northeast Ohio.
Absorption Rates and Months Housing Supply
These two terms are one piece of the puzzle to help real estate agents, appraisers, home sellers and buyers alike make sense out of the real estate market.
This is a little-known, but effective tool, if used in proper context, to help a home seller or buyer understand the market conditions for the home they wish to sell or buy.
The easiest way to define these two terms is with an example:
Absorption Rates (AR)- The rate at which homes are selling (ie. absorbed), over a specific time period, typically 12 months.  This is beneficial in determining supply and demand trends for the local market.
Months Housing Supply (MHS) - How long it will take, in number of months, for all the current homes for sale to be sold.
Formulas:
Monthly Absorption Rate = # of homes sold in the past twelve months  / 12 Months.
Months Housing Supply = # of currently active homes for sale / Monthly Absorption Rate
Reference Guideline:
# Months to Sell            Type of Market
              1-4                      Sellers
              5-6                      Balanced
              ... more

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