I have written before about learning the language of buying
and selling a home. There are many
concepts that your Realtor® can explain to you – Days on Market, Current Market
Value, Inventory, Staging, etc. An
important concept that many find somewhat mysterious is the Absorption
Rate. It doesn’t have to remain a
Tina Bilazarian, CRS, ASP, SRES
The most basic explanation for the phrase “Absorption Rate”
is that it is the rate at which the current market in a specific area or price
range “absorbs” the available inventory.
How quickly will a house sell in the current market conditions. In order
to compute this figure, key pieces of information are needed. First, what type and price range should be
considered to acquire the absorption rate for single family homes in Shrewsbury
between $300,000 and $600,000?
We need to compile how many homes fit the criteria of homes
sold during the last 12 months, and how many are currently for sale. Based on information* from the local
Multiple Listing Service we know that 145 homes fitting that criteria sold
during the last 365 days. This gives us
a rate of home sales for Shrewsbury of 2.5 – which means that on average one
home sold every 2.5 days.
Currently there are 41 homes for sale in Shrewsbury,
therefore, this number of homes multiplied by the ‘rate of home sales’ equals
103.20 days or 3.44 months. Based on
these figures, it can be said that if the current market conditions do not
change and if no new listings come on the market; it would take 3.44 months for
the current inventory of $300K to $600K single family homes to sell at this
How can knowing this information help you as a home seller? It can give you an idea of the length of time
your home may be on the market at the current pace. As a buyer, if your Realtor® knows this
information, it can be very helpful during the negotiation process.
If you are interesting in buying or selling a home, please contact us.
Tina Bilazarian, firstname.lastname@example.org
from MLSPIN reflects homes sold in 01545 between Feb. 10, 2012 and Feb. 9, 2013
and homes currently available on Feb. 9, 2013.
Figures rounded to nearest 10th of decimal point.