Do you know what the absorption rate is in any given area. Did you know that you can use this handy number to help determine how to price your home, or buy a home.
The absorption rate is simply a way to tell if we are experiencing a buyer's, seller's, or balanced market. It tells us how long the current inventory would take to sell if no new homes came on the market. This can be done for a particular zip code, a price range, or just a subdivision.
Here is an absorption rate chart that explains how many months make up the different markets:
If a home sells in under 4 months, it is considered a fast seller's market. Prices are rising. However, if it is taking longer than 7 months, then it's a buyer's market and prices are heading downward.
Here are the absorption numbers for different parameters for home sales in Kenilworth;
The fact that there are so few homes under $1 million in Kenilworth is reflected by their quick sale and only a 3-month absorption rate. All other types of homes in Kenilworth fall into the buyer's market with longer market times.
Kenilworth is the smallest of the North Shore villages with only 2500 people and approximately 800 housing units. It is also the most expensive because of its size, school, and housing stock. This will naturally make the absorption rates and days-on-market higher than other villages that are larger and have more to choose from.