Harrisonburg Real Estate Absorption Rate - March 2011

Thanks for reading the Kline May Realty Absorption Rate report. Click here to download March's Absorption Rate Charts. If you are new to the our report or have questions about exactly what this report will tell you please read our “Just what is Absorption Rate” section at the bottom half of this blog.

So what does this quarter’s report tell us about the market?

• In general, there is a bit more than a one year supply of homes out there, at the current pace of sales (13.57 months supply)
• Since the absorption rate is calculated by looking at the current inventory versus the sales over the past 12 months, fluctuations in inventory are a critical factor. When looking at the decrease in inventory over the past six months, it is clear that the pace of sales has slowed.
• In each subsection of our area, it is important to look at the change in inventory compared to the overall change in absorption rate. If the change in absorption rate has exceeded the change in inventory, the pace of sales has increased.
• Townhomes, in general have fared a bit better than single family homes.
• There are no areas of our area that have shown significant improvement in sales versus the change in inventory. Contracts (not documented in this report), however, have increased in March and April suggesting late Spring and Summer sales which will surpass 2010 sales for the same months.

Just what is “absorption rate”?

Absorption rate tells us how quickly the market is “absorbing” the inventory of homes for sale. We calculate this by taking the number of homes for sale and dividing by the number of homes sold in the past 12 months. For example, if there are 50 homes for sale and 40 homes had sold in the past 12 months, our calculation would be:

• 50/40 = 1.25, telling us that at the current rate of sales it will take 1.25 years for the market to absorb the current inventory. For purposes of this report, we multiply the annual figure by 12 to get a monthly figure, in this case 15 months (1.25 x 12).
• Our report, in addition to the summary page, offers charts and the accompanying detail in the following areas:
          Harrisonburg
          NE Rockingham County
          NW Rockingham County
          SE Rockingham County
          SW Rockingham County
          Massanutten

Within each area are separate charts for single family homes, townhomes and the combination. The charts are broken down by price ranges, in $50,000 increments for reports which contain single family homes and in $20,000 increments for reports which contain only townhomes.

Click here to view or download our Market Absorption Charts for March, 2011.

This original blog post can be found by clicking here