Have you ever heard the term "Absorption Rate?" It is actually a pretty helpful bit of information when analyzing the real estate market.
Absorption Rate = The rate at which properties are sold in a specific area.
New Orleans Absorption Rate
If you take a look at the graph, you can see that over the past year or so, the absorption rate (months of inventory) typically hovers around 7.8 to 9.5. This tells us that if no new houses came on the market, it would take around 7.8 to 9.5 months to sell the remaining inventory of homes. As a New Orleans Realtor, this statistic can be very helpful when discussing the market with clients. However, like all statistics, absorption rate cannot be taken simply at face value...we need to analyze the numbers that make up absorption rate to fully understand.
To find the monthly absorption rate, you would take the number of active properties for sale in a given area at a given time and divide that number by the number of sold houses in the same area at the same time. For example, in May 2010 there were 1813 houses for sale in Orleans Parish and there were 232 sales. 1813 divided by 232 equals an absorption rate of 7.8.
Please continue reading: NOLA real estate
This New Orleans real estate blog post was provided by Darryl Glade, New Orleans Realtor with RE/MAX N.O. Properties. Darryl can be reached at email@example.com or by phone at 504.451.8960. Darryl's office is conveniently located in Uptown New Orleans at 8001 Maple Street. Darryl works throughout the Greater New Orleans area including Uptown, Lakeview, Broadmoor, Mid-City, Metairie, Kenner, Westbank, French Quarter, and the Warehouse District.
For New Orleans and the metro area real estate info, please see NOLA Real Estate.
To search New Orleans Properties, please see New Orleans Property Search.
Click here to view Darryl Glade's Real Estate Profile.