how to calculate the absorption rate?

liaoyu03 · Joined: 09 Sep 2007 Posts: 141 0.48 Dollars($)

How is the absorption rate calculated by dividing the change in space by the occupied area at the start of the time period.?

larry · Joined: 27 Jun 2007 Posts: 3245 460.30 Dollars($)

Hi Liaoyu,

To calculate the absorption rate, you should divide the number of homes listed in your market by the number of homes that has been sold during that month. It will help you to indicate how long the average homes are taking to sell in the market.

When the absorption rate is between 5 and 6 months, it means that it is a normal market condition. But if the absorption rate is between 1 and 4 months, then it is a sellers market. And if the absorption rate is more than 7 months, then it means it is the buyers market.

liaoyu03 · Joined: 09 Sep 2007 Posts: 141 0.48 Dollars($)

thanks larry.

larry · Joined: 27 Jun 2007 Posts: 3245 460.30 Dollars($)

You are most welcome.

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