Absorption Rates are a helpful indicator when evaluating a real estate market. The absorption rate is the mathematical representation of the relationship between the current supply and recent demand. The total amount of available properties is divided by the total amount sold in a recent period of time. The resulting number represents the number of months it would take at that same pace, to sell the entire inventory of product. As our market is a smaller one, it is helpful to look at the past twelve months of sales to get a sense of market activity.

Market Conditions are often gauged as:

Balanced Market: when the Absorption Rate is between 6 months

Seller’s Market: when the Absorption Rate is less than 6 months

Buyer’s Market: when the Absorption Rate is higher than 6 months.