What is The Absorption Rate and Why Should I Know It?

Sarah Vieyra March 16, 2022

If you are selling a home in Park City or Heber Valley or thinking about it over the next year, you will need to understand the absorption rate to calculate how fast your home might sell.
The absorption rate is the rate at which homes sell in an area or for a particular price range. The higher the rate the faster the homes are selling. It helps to know the absorption rate for your area so that you know how quickly your Park City home has a chance of selling.
Figuring this out can be easy if you take the number of homes sold in a particular month or year for an area and divide it by the total number of homes for sale at the end of the month or year.
If you’re selling your home, it helps to know about this rate so you have an idea how fast your home could sell. The absorption rate is one of the most basic and practical ways to calculate homes sold. This rate calculates how the market absorbs or gets rid of inventory. Real estate markets are always changing and new inventory (properties) is being added as old inventory (properties) is sold. Knowing the absorption rate gives you a good idea as to how your home will sell.
First, you need to know how many homes in a particular price range or area have sold in the last 12 months. You also need to know how many homes of the same price range or property type is currently on the market. Let's say that in the past year there were 8,000 homes in a certain price range. There are currently 2000 homes on the market that match that search criteria and price. This means that the current inventory level sold four times in one year. Then we will want to divide that number by 12 and you have the absorption rate in months. Typically it will take about 2 to 3 months for a home to sell with this type of market on average.
You can also check out online calculators to determine the absorption rate but the best way is to speak to your real estate agent. It is my job to help you find the absorption rate for your area and price. Still, it all comes down to pricing the home correctly, staging it appropriately and getting the right buyer into that home. It’s a combined effort from the agent and the seller to present the home to potential buyers in a way that will help get the hold sold. Some homes will sell in 30 days while others will sell closer to three or four months. The average is that absorption rate, but knowing this can set you up for selling success.
If you're interested in learning more about the absorption rate or would like to speak to me about how long it will take for your Park City home to sell feel free to give me a call at any time.
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