ABSORPTION RATE is the mathematical representation of the relationship between supply and demand. The total amount of available product is divided by the total amount of product sold in the previous month. The resulting number represents the number of months it would take, at that same pace, to sell the entire inventory of product.
“Normal Market” conditions exist when the Absorption Rate is between 5 and 6 months.
“Sellers Market” conditions exist when the Absorption Rate is lower. (1-4 months)
“Buyers Market” conditions exist when the Absorption Rate is higher. (7+ months)
—Thanks to Rich Schiffer from Active Rain for the above information.
The current absorption rate for the Claremont Unified School District area as of today:
124 “listings” homes, townhomes, condos for sale (information taken from the IMRMLS)
10 homes, townhomes, and condos have sold/closed escrow in the past month 12/21/07 – 01/21/08
What this means is there is 53.91 weeks or 12.4 months of inventory. At this rate, it will take a little over a year to sell the 124 homes we currently have.
