How Absorption Rate is figured

Denverrealestateabsorptionrate
Knowing your area’s Absorption Rate, helps to track trends.  Understanding the market and where it is headed is part of our job as real estate professionals.

Absorption rate is NOT an exact science.  Figuring it is based on
the premise that one will be looking for a TREND.  It is advised to
consistently do the numbers each month, to be able to track a trend.

Getting Starting…

You need to know 2 figures.

1) How many listings are currently on the market?

2) How many listings sold last month?

You will be counting under-contract or pendings as listings, since they are not SOLD yet.

Multiple the number of solds last month by 12 (months).

Divided by the current listings equals # of Units that would sell each week.

Divide the # or units that should sell each week into the number available = absorption rate.

The Definition of Absorption Rate:

Number of weeks it takes to sell the current inventory at the present rate of sales.

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About the Author

Kristal Kraft
Kristal has been helping buyers and sellers in Colorado since 1984. She enjoys sharing her knowledge of the Metro Denver Real Estate market via blogging and in person while driving around the beautiful Rocky Mountain town of Denver! For fun, Kristal enjoys shooting things with a Canon. Visit Denver Photo Blog

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One Comment

  1. Posted June 4, 2007 at 9:48 am | Permalink

    As usual, Kristal, you serve up some really helpful and practical information for today’s savvy consumers. Good stuff!

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  1. [...] Absorption Rate in Denver is at 32.16 weeks (a 2 week improvement over same time last [...]

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  • Welcome to Denver Dwellings where I write about Denver real estate trends, where to live, eat, play and how to buy or sell a house in Colorado. This part of the world is where I call home, it is a place I love and I hope that joy shows through!