Published on June 15th, 2010 | by Genevieve Williams0
Real Estate Absorption Rates
In terms of real estatean absorption rate has to do with how quickly or how slow the inventory of a certain area like Charlotteor a neighborhoodlike Chantillyis being sold.
You take the number of homes solddivided bya defined time period like 6 months to give you homes sold per month. You then take the active number of listings on the mkt and divide that by the number selling per month to give you your absorption rate.
Chantilly’s is currently at 16 months. So its going to take a 1 year and 4 months for all the homes currently listed in Chantilly to sell. So how does Chantilly compare to other areas of Charlotte?
Well, it depends on the area you compare it to. We are selling a little slower than Plaza Midwood whose mkt will absorb their inventory in 13 months. However, we are absorbing our inventory inChantillytwice as fast as Elizabeth. Why?
Plaza Midwood is very similarin theirpricing to Chantilly, but it isa much larger area…they have more homes for buyers to choose from and their business district is very attractive. Elizabeth is an established historic community with a great school system…hence, the homes are more expensive and their community is inahigher price point although its right next door.
Absorption Rates based on first six months of 2010
12 sold / 6 months (1/1/2010 – 6/30/2010) = 2 per month sold
32 active / 2 sold per month = 16 months to absorb inventory in Chantilly
55 sold/6 months= 9 per month sold
123 active / 9 sold per month = 13 months to absorb inventory in Midwood
6 sold / 6 months = 1 sold per month
31 active / 1 sold per month = 31 months to absorb inventory Elizabeth