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What is Absorption Rate and Why is it Important?
Great blog post explaining absorption rates.If you have any questions about the Las Vegas or Henderson absorption rates, contact me and I will send your current reports for your zip code, community, etc.
A question I often get asked? What is Absorption Rate and why is it important?
The simplest definition of absorption rate is the rate at which properties are sold in a given area. For example, there are currently 845 single-family homes for sale in Franklin TN. During December (the most recent month of closed data), 95 homes closed in Franklin.
If you take the current inventory of 845 homes and divide that by last month's closed sales (845/95), you get 8.9 months. That means if the current inventory stayed the same and the rate of closed sales remained the same, it would take 8.9 months to deplete or sell the existing homes.
A normal market would be considered between 5 - 6 months of inventory. If there is 1 - 4 months of inventory, it is considered a seller's market. If there is more than 7 months of inventory, then it is considered a buyer's market. Based on the most recent data, Franklin TN is in a buyer's market.
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