A Significant Guide To Absorption Rate And Why Is It Important

Abstract

What Is The Absorption Rate In Real Estate? The absorption rate is a parameter that is used to evaluate the rate at which the currently available real estate properties are sold in a certain market during a specific period. Since the rate of absorption is the best parameter to determine how fast the real estate properties are selling in the market, it is used by many real estate investors to understand whether it is a seller's market or a buyer's market. The rate of absorption also helps the sellers to set their property sales prices to compete in the given market. How Is Real Estate Absorption Rate Calculated? The formula to calculate the real estate rate of absorption is very easy. In the above example, the rate of absorption for one month in the specified area is 26%. The rate will differ based on the area of the market and the lent of time. Why Is Absorption Rate Important? As per the above example, the rate of absorption in that area was 26% in one month. Conclusion The absorption rate in real estate is one of the simplest yet powerful ways to determine the sway of the current real estate market.