(January - August 2007)
ABSORPTION RATE is simply the pace at which homes are absorbed by the market. By measuring the number of homes in inventory and the number of homes sold, we can estimate how long it will take to sell the homes currently available.
The first chart shows the number of properties for sale in Anne Arundel County and how many properties sold and settled. The absorption rate, on the second chart, is calculated by dividing the number of sold properties by the number of homes in inventory. Any percentage above 50% means that more homes sold than didn't; if the percentage is less than 50%, fewer than half of the homes on the market sold.
Let's look at this example: If there were 1000 homes on the market, and 250 sold, that would indicate 25% of available homes sold. Another way of looking at it would be to say that there was a 4-month inventory of homes on the market, if homes continue to sell at the same rate.
WHAT DO THESE CHARTS MEAN TO YOU? Homes are continuing to sell in Anne Arundel County, but the listing inventory is drastically out of synch with the number of buyers. In order for any property to sell under these circumstances, it MUST be priced right! Overpriced homes don't stand a chance! They will languish on the market for month after month and, as prices are forced lower by market conditions, homeowners will have to make price cuts later, possibly far below today's "right" price.
Based on the data available. it would take more than five months to sell of the homes currently on the market - assuming no new listings become available.
Source: Metropolitan Regional Information Systems, Inc. (MRIS). Chart by Margaret Woda. All information deemed reliable but not guaranteed.
More Anne Arundel County MD Real Estate trends:
Copyright 2006-12. All rights reserved.
DISCLAIMER: Information contained in this post is deemed reliable on the date of publication, but it is not guaranteed and it is subject to change without notice.
__________________________________
Margaret Woda, REALTOR and Associate Broker
Direct: (301)346-2923 or click on EMAIL
FREE home search online (No registration required)
FREE home search APP for your iPhone/iPad (demo)
FREE online relocation information
Check my reviews on Zillow
Long & Foster Real Estate, Inc., 2191 Defense Hwy., Crofton, MD 21114 (410) 721-1500
Absorption rate is the rate at which buyers purchase existing inventory, or in other words, the rate at which buyers absorb inventory...
That said, you make some good points... would you not argue that how the house is staged, curb appeal, etc. have something to do with it too?
I'm still suffering from chart envy, and have MUCH to learn, Brian. Thank you again for your tutorial!
Paul, I'm not sure if you're disagreeing or agreeing!
Now, off to a listing appointment, and we'll see if this helps with the pricing!
Katerina - Brian Block posted an easy-to-follow tutorial for building charts. http://activerain.com/blogsview/193696/Spicing-up-Your-Market. He writes such wonderful posts that I always enjoy, and I often mentioned his charts whenever he used them. I spent an evening practicing, building the charts through July and pre-writing the market study reports, then just slipped in the new data when it was released for August. Once the initial excel sheet is built for the first chart, it is just a case of adding one month at a time.
Lisa - I always thought the same thng when I saw Brian's charts, and was so grateful when he made that post teaching us how to do it. The link is in my acknowledgement to Katerina. This information was an eye-opener for me, and I live with it every day - the graphic says it all so much better than words.