Market Absorption Rate 2009-05-04

The market sees its ups and downs. For the most part, our market continues to increase its inventory (Market Absorption) and signs of buyers continue to come and go. Many agents have stated recently the numbers of buyers is greatly increased; this opinion is based on ‘their’ activity over the fall and winter months. The important information is the number of properties being placed under contract, and then closed.

Though our absorption rate continues to grow, the number of properties placed under contract has increased slightly. This usually is indicative of the market beginning to reduce its inventory (comparably speaking).

Our Absorption Rate for our entire market is 69.99 months, for land it is 169.91 months, and for residential is it 38.42 months.

Thank you for your time,


Marc White, ABR, GRI, E-Pro
Marketing Specialist
Broker/Realtor
Direct 828-406-2134
Marc@CedarFallsRealty.com
To see property listed on our website, PLEASE CLICK HERE Thank You for allowing me the opportunity to serve you.

Absorption Rate: Again, I want to emphasize the use of the Absorption Rate versus the “normal” Days on Market approach. The days on market approach (especially for our area) changes so randomly that there are no actual predictors to show whether the market is getting better or worse. The days on market approach at the end of the year (December 31, 2009) will be at a high, while on January 15, 2010 it will be at a very small number. The reason; our days on market is for each specific listing, not each property. If you change your listing price and sign a NEW agreement, in most cases the agent has the opportunity to create a new listing, rather than keeping the listing as “older”; meaning your days on market has now started over. Absorption rate erases most of the errors that are caused by this fluctuation in time and listings. It is not exact and it requires much more work on an agent’s part to provide you with this information, but at the end of the day, the effort is truly worth the expense.
*Another way to think of Absorption Rate is “Inventory”. In the automobile industry, dealerships try to keep a 75-90 day supply on-site. There are many reasons they use these numbers, which we don’t need to get into, but the information helps us to understand the Absorption Rate for our real estate industry.