What are absorption rates, and why do I want to know?

By
Real Estate Agent with Keller Williams Realty

Real Estate Absorption RatesAbsorption rates sound more like a measure of how well a paper towel soaks up a mess,  than a valuable piece of information as applied to real estate pricing. With real estate, simply stated, the absorption rate is the ability of the market to sell off all of the houses for that price range or geographical area. Let's use the example below:

Subdivision A has 50 homes on the market for sale. Your real estate agent has studied the market and observed an average of 5 homes sell every month. At this rate, it would take 10 months for all homes to sell. In our local Murfreesboro area, there are 1,553 properties for sale with sales last month of 224 homes. 1,553/224=6.93 absorption rate.

Ok, so what does that mean to me as a home seller you ask? These figures are important to know for your local area as this is an indicator of length of time for your home to sell. Of course there are many other aspects to consider such as condition, location, neighboring properties, etc. But all other aspects being equal, this would indicate if you need to sell your home faster, it would need to be priced better than your competition.

For an analysis of your local area, be sure to contact your real estate professional or you may contact me for an agent in your area.

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