What Is ABSORPTION RATE & How Is It Calculated?
By Brian Morgenweck, Broker/Owner, GRI, CRS, ABR, SRS
(Power Realty Group, LLC Bergen County, NJ )
Originally posted at Jersey Real Estate Scene: What Is The Absorption Rate In Real Estate And How Is It Calculated? What is absorption rate and how is it calculated? The Absorption Rate is a calculated "pace" at which properties listed for sale have been selling in a specific market area. When measured consistently, absorption rate is a useful indicator in determining future supply and demand trends in a market. If market conditions remain the same and no new listings are added to the area's inventory, it determines the pace at which current inventory should take to sell out. This is most often measured in months and a "healthy" (balanced) market's absorption rate generally falls in the 5 - 7 month range. The absorption rate is certainly not a highly scientific calculation or absolute i...
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