Good Explanation of How Absorption Rate in Real Estate Works


Ryan Poelman in the Huffington Post has a good explanation of, what absorption rate is and why some real estate professionals use it as a measure of the local real estate market.

Let's start with a dry definition of absorption rate in real estate and then we'll make it a bit more interesting. Absorption rate is the number of months it would take to sell the currently listed homes in the market. That sounds simple, and the math is for the most part. However, it's an important concept, and it's used by a great many real estate related businesses to attempt to predict home prices and sales activity going forward.

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