Absorption Rate: Crofton, MD, 21114

Timing the market is a key concern that both buyers and sellers share. One of the most important tools for determining the right time to buy or sell is calculating the absorption rate for your given market area. According to  Leslie Monaco on Realtor.com, absorption rate= the rate at which homes are selling in a specific area. The formula needed to calculate this rate is:

NUMBER OF ACTIVE LISTINGS X THE RATE OF HOME SALES = ABSORPTION RATE

For a concrete example lets look at the Crofton market year to date. From January 1-October 31 here are the factors involved:

 

# of homes sold= 296

Active Listings (As of Oct. 31)= 54

Time Frame: 304 Days

 

Before plugging our variables into the formula above we first have to determine the Rate at which homes have been sold in Crofton this year:

304 Days Divided by 296 Homes Sold = 1 home sold every 1.027 Days;

Therefore NUMBER OF ACTIVE LISTINGS (54) X RATE OF HOME SALES (1.027) = ABSORPTION RATE (55.458 DAYS OR 1.85 MONTHS)

 

Again, according to  Leslie Monaco a balanced real estate market will typically have an absorption rate of 5-7 months. With a rate of 1.85 months the Crofton market appears to favor sellers. However, there are other factors to consider before drawing such conclusions. These factors will be discussed at a later date.

http://www.realtor.com/blogs/2011/11/30/how-do-you-calculate-absorption-rate/

 

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