Real Estate Terminology - Absorption Rate
The Absorption Rate is the ability of the real estate market to sell off all of the houses that are for sale. For example, in West Vancouver last month (April 2008) there were 64 sales of detached homes. There are currently 496 detached homes for sale, so if you divide 496 by 64 you come up with 7.75. If no other homes came on the market, it would take almost 8 months for the supply to be depleted.
In North Vancouver, there were 111 sales of detached homes last month and there are currently 377 listed. Doing the same math as above, we are left with an absorption rate of 3.4.
What do these numbers mean? Well, in both areas we are seeing a shift to a more balanced market than what we have seen in the last few years. West Vancouver’s absorption rate would seem to indicate a movement towards a buyer’s market and North Vancouver’s, although on the whole more balanced, is trending that way as well.
These are just some of the numbers that we as realtors look at in helping our clients make informed decisions about the real estate market. If you would like to comment on this video or have some questions, please email me at email@example.com. Have a great day!