Results
Enter the details above to see the absorption rate.
Understanding Absorption Rate
The absorption rate is a crucial metric in real estate that helps gauge the current state of a housing market. It essentially tells you how quickly homes are being sold in a specific area over a given period.
How it's Calculated:
The most common way to calculate absorption rate is by determining the number of properties sold in a month and dividing it by the total number of active listings. This gives you a monthly absorption rate, often expressed as a fraction or percentage of inventory sold per month.
A simplified calculation, useful for understanding market speed, can be derived from the number of properties sold and the time it took for those sales to occur.
Formula Used in This Calculator:
While the traditional formula looks at inventory, this calculator uses a more direct approach to understand the pace of sales:
Absorption Rate = (Number of Properties Sold) / (Number of Days on Market)
If an average days to sell is provided, it can offer additional context, though the primary calculation focuses on sold properties within a defined period.
Interpreting the Results:
- High Absorption Rate: Indicates a seller's market. Homes are selling quickly, suggesting high demand and limited supply.
- Low Absorption Rate: Suggests a buyer's market. Homes are taking longer to sell, implying lower demand or an oversupply of properties.
- Balanced Market: Typically falls within a range where neither buyers nor sellers have a significant advantage.
Understanding the absorption rate helps buyers make informed decisions about when and where to buy, and assists sellers in pricing their homes competitively.
Example:
Let's say 50 properties were sold in a particular neighborhood over the last 90 days. The absorption rate would be calculated as:
Absorption Rate = 50 properties / 90 days = 0.56 properties per day.
If the average time it took for these properties to sell was 45 days, this suggests that on average, homes are moving off the market at a steady pace.
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function calculateAbsorptionRate() {
var propertiesSoldInput = document.getElementById("propertiesSold");
var daysOnMarketInput = document.getElementById("daysOnMarket");
var averageDaysPerSaleInput = document.getElementById("averageDaysPerSale");
var resultDiv = document.getElementById("result");
var propertiesSold = parseFloat(propertiesSoldInput.value);
var daysOnMarket = parseFloat(daysOnMarketInput.value);
var averageDaysPerSale = parseFloat(averageDaysPerSaleInput.value);
if (isNaN(propertiesSold) || isNaN(daysOnMarket) || propertiesSold < 0 || daysOnMarket <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for Properties Sold and Days on Market.";
return;
}
var absorptionRate = propertiesSold / daysOnMarket;
var resultHTML = "
Absorption Rate: " + absorptionRate.toFixed(2) + " properties per day";
if (!isNaN(averageDaysPerSale) && averageDaysPerSale > 0) {
resultHTML += "
(With an average of " + averageDaysPerSale.toFixed(1) + " days to sell properties)";
} else {
resultHTML += "
(Average days to sell not provided or invalid)";
}
resultDiv.innerHTML = resultHTML;
}