The real estate absorption rate affects how long your property will be on the market and in return has a major effect on the sold price of your home ? It is also a way to predict future selling prices.
How to calcuate your absorption rate
Find the number of homes currently available for sale in your neighborhood. Then divide that number by the number of homes sold in your community in the last 30 days.
For example... If there are currently 20 houses for sale in Riverbend and there have been 5 house sales in the last 3- days... It means the absorption rate for Riverbend Houses is 4 months. That means there are enough Riverbend houses on the market for the next 4 months.
Is it a buyers or sellers market?
An absorption rate of 0-4 months is considered a sellers market which means there is not a lot of inventory and prices will rise.
An absorption rate of 4-6 months is considered a balanced market which means supply and demand is pretty even.
An absorption rate of over 6 months is considered a buyers market which tends to decrease house prices a bit due to an over supply.
Currently in Terwillegar - Riverbend Edmonton (December 15th, 2022), there are 80 single family houses on the market and there have been 29 house sales, so the absorption rate is 2.76. It's still considered a sellers market and is one of our best neighborhood to purchase a home.