Absorption Rate - What Homeowners Need To Know

Posted by Joe Manausa on Tuesday, April 15th, 2008 at 10:01am.

A key ingredient in determining the value of a home in the Tallahassee real estate market, or any real estate market for that matter, is understanding absorption rate and how it is measured. We define an absorption rate as an estimate of the rate at which homes will be sold each year. This is a critical piece of information that is needed to understand how the inventory of available housing effects the sale of a particular home type in the Tallahassee real estate market. The "math" behind determining the absorption rate of homes in any particular market is relatively easy. We calculate absorption rate as the average number of homes selling each month and use this to determine the amount of supply currently on the market. We measure months of supply as [The Number of Homes Currently on the market] ÷ [The Average Number of Homes Sold each month in the past 12 Months] Taking a look at the residential absorption rate in the Tallahassee real estate market (all counties surrounding Tallahassee), we find that there are 4,799 residential units on the market (single family detached homes, condominiums, and townhouses) with twelve months sales total 3,903 homes means that the residential absorption rate is roughly 325 homes per month. We can use this information to determine the "Months of Supply" of homes in the Tallahassee real estate market.

4,799 homes currently on the market 3,903 homes sold in the past 12 months 325 homes on average sold each month 4,799 ÷ 325 = 14.8 Months Supply of homes in inventory. If you would like more information on how inventory levels are moving in the Tallahassee real estate market, check out our Leon County Real Estate Market Report on the Tallahassee Real Estate Web Site ! It is updated several times per week and shows what inventories are doing currently.
As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible. Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market. If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.   Joe Manausa is a real estate investor and the Broker and Co-Owner of Joe Manausa Real Estate. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001. View Joe Manausa's profile on LinkedIn

Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

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