Understanding Absorption Rates

Posted by Joe Manausa on Wednesday, April 16th, 2008 at 11:39am.

twelve-month absorption rate has dropped to 271 homes per month in Leon County. While this is better than the surrounding counties, it is still not that exciting.
We have had quite a bit of response to yesterday's blog on absorption rates in the Tallahassee real estate market. Apparently, many people who read this blog want to see how Leon County (specifically) is doing versus the entire Tallahassee Board of Realtors Multiple Listing Service (MLS). I did a download from the Tallahassee MLS for Leon County homes that sold from April 16, 2007 through yesterday, April 15, 2008. I also pulled all of the active listings in Leon County. I also took the time to remove all of the duplicate sales and listings (the MLS has many homes that are entered more than once which skews data) to come up with the following information:
As we can see from the table above, there is a whole year's supply of homes across all price ranges in the Tallahassee real estate market (Leon County only). Our twelve-month absorption rate has dropped to 271 homes per month in Leon County. While this is better than the surrounding counties, it is still not that exciting. I suspect that all the attention that real estate is receiving from the media is slowing home sales even more so than the post-boom recovery that was needed. If this is true, we can expect a nice recovery-upswing when the media gets bored with the real estate market.
 
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.

2 Responses to "Understanding Absorption Rates"

Steven wrote: Thanks for the chart. It's very informative.

How different is that chart if you change the parameter to let's say the last six months rather than the last year?

I ask because, as I understand it, the market really went South after August 2007, when the availability of easy mortgages started to dry up.

If you used statistics from the past six month, which only includes the current tough credit market, do the statistics look much worse?

Posted on Tuesday, April 22nd, 2008 at 9:37am.

Joe Manausa wrote: Great question Steven. Short answer is the statistics would look worse. I suspect even without seasonality they would look worse.

Unfortunately, you have to use the entire year. More sales occur from March through August than occur from September through February each year.

Posted on Tuesday, April 22nd, 2008 at 1:00pm.

Leave a Comment