Absorption Rate Calculator

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Understanding Absorption Rate in Real Estate

The absorption rate is a crucial metric in real estate that helps determine how quickly homes are selling in a particular market. It's essentially a measure of supply and demand. By calculating the absorption rate, buyers and sellers can gain valuable insights into market conditions, identify trends, and make more informed decisions.

A high absorption rate generally indicates a seller's market, where demand outstrips supply, leading to faster sales and potentially higher prices. Conversely, a low absorption rate suggests a buyer's market, where there are more homes for sale than buyers, potentially leading to longer selling times and price reductions.

The standard way to calculate the absorption rate is to look at the number of homes sold over a specific period (usually one month) and compare it to the total number of homes currently available for sale (the active inventory). The result is often expressed in months, indicating how long it would take to sell all current listings at the current sales pace.

Absorption Rate Calculator

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