Posted on: 15th Sep, 2007 08:26 pm
How is the absorption rate calculated by dividing the change in space by the occupied area at the start of the time period.?
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.
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.
thanks larry.
You are most welcome.