Absorption Rates

The Absorption Rate is the ability of the real estate market to sell off all of the houses that are for sale.

For example, if 100 homes are sold every month and there are 1200 homes for sale then it will take 12 months to sell all of those homes. If there are 2400 homes for sale then the absorption rate will be 24 months or 2 years.

If you would like to sell in 12 months then you need to take the absorption rate into account. In the above scenario with 2400 homes for sale, we know that only 1/2 of them will sell in the next 12 months.

To price a property correctly it would have to be in the lower 50% of the price range for similar properties in order for it to sell in the next 12 months. To sell in the next 6 months it would have to be priced in the lower 25% of the competition.

The above numbers are just to illustrate an example. If you would like to know what the absorption rate is for your neighborhood call us at (317)-805-4663 or email Mike Deck at mdeck@realestatelinks.com

This article courtesy of Outer Banks Real Estate Sales.