ThomasRiddleGroup

ThomasRiddleGroup

Absorption Rate in New Albany

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

Yes, absorption is the correct term for Sponge Bob’s ability to soak up water and the same holds true in the real estate industry. In real estate, the absorption rate is the amount of time, generally expressed in months, that it will take a market to “absorb” the current inventory based on recent history. In other industries, this measurement may be called turnover rate or simply weeks or months of supply.

As I’m sure most of you know, Kate and I have a background in retail where you live and die by turnover rate. If the inventory is turning too fast, you’re going to run out of stock and have empty shelves; too slow and it’s time to pull out the red pen and take a mark down!

In real estate, you often hear references to it being a Buyer’s Market or a Seller’s Market. The National Association of REALTORs suggests that a market is in balance when there is a 7-9 month absorption rate. When inventory is six months or less – it’s a seller’s market as there is more demand than inventory. Homes sell quickly and for close to or sometimes above list price. When the months of supply exceed 9 months, it’s considered a buyer’s market. Homes take longer to sell and the list price sales price ratio slides.

How do you figure the absorption rate? It’s a simple formula:

Inventory ÷ # Units Sold x Time = Absorption Rate

For example, if the market you are evaluating (subset) has 12 homes on the market and 6 homes sold in the past six months, the absorption rate would be 12 months.

The key is to understand the subset. In New Albany, there are many subsets, defined by price, neighborhood, age, location etc. Remember, real estate is local…very local. The absorption rate of a $1M brick home has little to do with understanding the market or absorption rate for a $400,000 vinyl sided home in a different neighborhood.

If you are interested in the absorption rate in your neighborhood, try out our free MLS Market Snapshot feature and have a look. Of course you can always drop me an email at tonyt@newalbanyrealty.com or call 614-939-1234 and I can run some quick numbers for you.

Recent Posts

May Handy Homeowner Tip

As we approach summer, here are a few tips on cleaning patios and protecting your home during grill season.

New Albany Voice Commands

Amazon’s Alexa is now connecting New Albany residents with community events and services. The same smart-speaker device that you use to turn the lights on, play music, etc., can now answer questions relating to New Albany.

Rob’s May Update

Managing Partner, Rob Riddle, talks about the current real estate market and what an increase in inventory means for buyers and sellers.

Get in Touch

Why Choose Thomas Riddle Real Estate Group?

Selling a house on your own can be an overwhelming task. There’s advertising to plan and budget for, open houses and private showings to arrange, purchase offers to negotiate, contract contingencies to worry about, and complicated paperwork to fill out. Make it easy on yourself by putting your home in the hands of seasoned professionals. We have extensive experience marketing properties and showing them to their best advantage.

Compare listings

Compare

Get Your Home's Accurate Value

Receive a No-Obligation Market Evaluation from our Listing Experts Rob Riddle, Tony Thomas, & Kate Thomas

Note: Please be assured we will use this information only to send you the information you have requested and we will never share or rent your contact information with any other party. By giving us your name and email address, you are giving Thomas|Riddle Real Estate Group permission to contact you.