Portsmouth NH Real Estate – Absorption Rates and Why They Are Important
May 2, 2008 by Ann Cummings
Filed under Selling Real Estate in the Seacoast
Portsmouth New Hampshire Real Estate Absorption Rate Information
If you’re a property owner in the
Portsmouth New Hampshire area, or anywhere for that matter, one of the
things that’s really important to know in today’s real estate
market is the absorption rate for your area.
What is that, and more importantly, why should you care about
it?
The real estate absorption rate tells you
just how long it would take for the buyers out there in the market to absorb the
current inventory of homes or condos with no more new listings coming on the
market. We start with the number of sales that took place within a specific
period of time, and then we look at the number of properties currently for sale,
and come up with amount of time it would take to sell every property currently
on the market.
I’ll show you how we figure it out. Let’s take Portmouth New
Hampshire homes as an example:
In the last 5 months, we had 42 homes
sell, and we currently have 80 homes for sale. If you divide 42 (homes sold)
by 5 (months – the time period I used in this example), we get 8.4, which is the
average number of homes sold per month in the last 5 months. So, if we’ve got
80 homes currently on the market for sale, it will take almost 9 1/2 months to
absorb that amount of inventory, assuming no new listings come on the market to
increase that inventory.
So, now why is knowing that number important to you?
Very few people use absorption rates. I know when I bring it out at
listing appointments I’ve seen blood drain from the sellers face.
It is pivotal information and wreckless to not know how to calculate it
and present it to sellers and buyers, for that matter. I now
present the absorption rate with every offer, also.