How Absorption Rate is figured

By
Real Estate Agent with The Berkshire Group Realtors
http://actvra.in/fDf

cheat sheet for figuring real estate absorption rateKnowing your area's Absorption Rate, helps to track trends.  Understanding the market and where it is headed is part of our job as real estate professionals.

Absorption rate is NOT an exact science.  Figuring it is based on the premise that one will be looking for a TREND.  It is advised to consistently do the numbers each month, to be able to track a trend.

Getting Starting...

You need to know 2 figures.

1) How many listings are currently on the market?

2) How many listings sold last month?

You will be counting under-contract or pendings as listings, since they are not SOLD yet.

Multiple the number of solds last month by 12 (months).

Divided by the current listings equals # of Units that would sell each week.

Divide the # or units that should sell each week into the number available = absorption rate.

The Definition of Absorption Rate:

Number of weeks it takes to sell the current inventory at the present rate of sales.

 

 

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Rainmaker
612,842
Bob Miller
The Ruiz/Miller Team - Ocala's Dream Team
Keller Williams Cornerstone Realty

Hi Krystal, thanks for sharing.  I am a stats guy and that is one I was not sure how to calculate.

January 23, 2012 05:59 AM
Rainmaker
1,143,213
Cheryl Ritchie
Southern Maryland 301-980-7566
RE/MAX Leading Edge www.GoldenResults.com
This made it in the top ten views of the year. Many, many kudos to you!
January 24, 2012 08:15 AM
Rainmaker
561,400
Joy Daniels
Joy Daniels Real Estate Group, Ltd.

This is very easy to follow steps.  Thank you for providing them.

January 25, 2012 02:44 PM
Rainer
4,771
Chris Huston
Keller Williams Premier Partners

That's interesting. I'd like to re-post this, but not sure if that's okay? I'm new to AR and blogging. 

Thanks! 

May 03, 2012 05:25 PM
Rainer
34,575
Elva C. Benjamin
REALTOR, ABR, CDPE, SRES
Miller & Associates Real Estate, LLC

Thanks so much.  This came in handy for verifying we were doing the calculations correctly for class. 

November 14, 2012 08:42 PM
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Kristal Kraft

Denver Real Estate - 303-589-2022
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Additional Information

Soapbox musings for and about Denver relocation and real estate.

Author Bio: Kristal Kraft is a Colorado Real Estate Broker specializing in relocation to and from the Denver Metro area. She is an amateur photographer, cyclist, golfer and enjoys traveling just for the fun of it!


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