All About Newport Beach

head_left_image

What is the Definition of Absorption Rate?

Is it important to consider absorption rate when considering selling your home? What is Absorption Rate?

During an evaluation of a property, I provide a link to absorption rateThe absorption rate is a report of the current inventory  in a particular area or city, and provides trends in regards to the number of homes per month are selling over the past one year. This is important information for both buyers and sellers, as you can monitor trends by area by month.

Absorption rates show monthly trends, and information about sales for past one month, three months, six months and twelve months.  Absorption rate is basically - the length of time it will take to sell all the active listings assuming that no new listings are added. This provides absorption rate. This is important information when listing your home for sale.

The graph below is an example of absorption rate.

The absorption rate is calculated by taking the active listings, not the back up or pending as those listings are not available. Factored in is the number of sold properties during the same time periods - one month, three months, six months, and twelve months to determine how many homes sold per month.

To calculate the absorption rate,  the active listings for that month are divided by the number of sold that month .If there are no sales, then you cannot calculate it for that month. One month does not generally establish a trend, however 3 months, 6 months and 12 months does establish a trend.

Less Than 5 Months is a Seller's Market
5 Months to 7 Months is a Stable Market
7 Months or more is a Buyer's Market

This is important information when you are pricing your home to sell, or you are making an offer on a Newport Beach home, or considering purchasing Newport Beach real estate.

If I can answer any questions about absorption rate, please contact me.

Originally posted at NewportBeachRealEstateCafe.com

2 commentsSharon Paxson • July 25 2014 08:53PM
What is the Definition of Absorption Rate?
share
Is it important to consider absorption rate when considering selling your home? What is Absorption Rate? During an evaluation of a property, I provide a link to absorption rate The absorption rate is a report of the current inventory in a… more
Balboa Peninsula Homes for Sale | Market Update, June, 2014
share
Balboa Peninsula in Newport Beach | Market Update | June, 2014 Balboa Peninsula is a very desirable area in Newport Beach. The Balboa Peninsula offers diverse living with condos and single family homes. There are bay front homes, ocean front… more
OC Fair Opens in Costa Mesa | Be Sure to Visit the OC Fair
share
The OC Fair 2014 | Orange County Fair is Open The 2013 OC Fair is open! This is annual event that local Orange County residents look forward to each year! The OC Fair will remain open until August 10, 2014.. This is a local Orange County… more
Importance of Professional Photography when Listing Your Home
share
Importance of Professional Photography with Listing Your Home In my opinion, one of the most important considerations when listing your Newport Beach home for sale is ensuring that your Realtor® utilizes professional photography when presenting… more
Balboa Island Homes for Sale | Market Update, June, 2014
share
Balboa Island Homes for Sale | Market Update | June, 2014 Balboa Island i s a highly sought after area of Newport Beach. Balboa Island in Newport Beach consists of three islands in Newport Beach and the islands include the main island, the… more
Search Ocean View Condos for Sale in Laguna Beach
share
Condos for Sale in Laguna Beach | Laguna Royale Condos in Laguna Beach Laguna Royale is a condo complex located in Laguna Beach on Coast Highway. The address of the complex is 31423 Coast Highway. Laguna Royale is located in the 92651 zip code… more
601 Jasmine | Corona del Mar Duplex | Just Sold!
share
Corona del Mar Homes for Sale in the Village | 601 Jasmine | Just Sold! This duplex located in the village of Corona del Mar has just sold for $1, 630, 000. This property features two units, each with two bedrooms and one bathroom. Each unit also… more
Northwood Villas in Irvine | Irvine Condos for Sale
share
Condos for Sale in Irvine in Northwood | Northwood Villas for Sale Northwood Villas is a condo complex located in the Northwood area of Irvine. There are 179 condos located in the Northwood Villa condo complex and the streets are Barth Aisle,… more
Emerald Bay in Laguna Beach | Homes for Sale in Emerald Bay
share
Emerald Bay Homes for Sale Laguna Beach | Search Laguna Beach Homes for Sale Emerald Bay is a private gated community which is located in Laguna Beach. It is an exclusive community and many of these Emerald Bay homes have beautiful ocean views… more
Cameo Shores in Corona del Mar | Market Update in Corona del Mar
share
Cameo Shores in Corona del Mar | Market Update in Corona del Mar | April, 2014 Cameo Shores in Corona del Mar is a beautiful Corona del Mar community and the homes are terraced to preserve the view of the homes in this area. The coastline is… more