We have talked about absorption rate before. For those that missed it, absorption rate is the time it would take to clear the market of inventory if no more homes were listed for sale. This is measured in months, and is calculated by dividing the current inventory by the average number of homes sold per month, in this case, during the 3rd quarter.
Looking at the overall market, there is now almost a nine month supply of homes available. But the rate can vary, sometimes drastically, when you look at different areas and price ranges. Here is a table showing absorption rates in certain areas for the third quarter.
Absorption Rates by area - 3rd Qtr, 2007
| homes on market | avg sold per month | absorption rate | |
|---|---|---|---|
| southwest Dothan, outside Circle | 189 | 19 | 9.95 |
| northwest Dothan, inside Circle | 45 | 3 | 15 |
| southeast Dothan, outside Circle | 78 | 8 | 9.75 |
| Houston County, outside Dothan | 133 | 12 | 11.08 |
| Headland | 37 | 6 | 6.17 |
According to this data, Headland has the lowest rate, at only a six month supply of homes, while the portion of Houston County outside the city limits of Dothan has the most inventory, at 11 months.
What about the absorption rate at different price ranges? This table will shed some light on several price ranges, both in the Dothan city limits and in Houston County outside of Dothan.
Absorption Rates by price range - 3rd Quarter, 2007
| Dothan city limits | Houston County outside Dothan | |
|---|---|---|
| $80K - 120K | 5.08 | 9.5 |
| 150K - 200K | 10.71 | 19 |
| 250K - 300K | 9.6 | |
| over 350K | 33.5 |
The most troublesome stat is for homes priced over $350,000. With 67 homes currently for sale in Dothan in this price range, and only seven sales in the past three months, it would take nearly three years to clear this price range. On the other end of the spectrum, if you have a home in Dothan in the $80,000 to $120,000, you can likely expect a sale in a more reasonable time frame.
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