What is an absorption rate and why is it so important in real estate? An absorption rate is the percentage of the inventory sold in a given period of time. For example let's take a look at the condo real estate market today.
Figures obtained from the multiple listing service indicate the following:
Price/ # of condo units on the market
Less than 100K: 003
100,001-200K: 222
200,001-300K: 305
300,001-400K: 237
400,001-500K: 180
500,001-600K: 149
600,001-700K: 082
700,001-800K: 042
800,001-900K: 026
900,001-1MIL: 010
1,00,001-2MIL: 040
2,000,001+ : 015
TOTAL: 1,311
Currently there are 453 condos under contract and in the last 30 days 225 have been sold. At this rate the condo real estate market in DC has approximately 6 months left to exhaust all the inventory in the market.
Currently there are 453 condos under contract and in the last 30 days 225 have been sold. At this rate the condo real estate market in DC has approximately 6 months left to exhaust all the inventory in the market.
Another way of looking at it is by determining the absorption rate. In this case the absorption rate would be 17%. A percentage above 25% indicates a sellers market and below 15% indicates a buyer's market and anything in between would be considered a balanced real estate market. You be the judge. Is it a buyer's market, seller's market or do we have a balanced real estate market in DC, MD & VA?
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