Market Absorption

As Realtors, we have a lot of data at our fingertips.  The MLS provides a wealth of history on past sales and active listings:  days on market, price per square foot, list price versus sales price, and so much more.  Knowing how to use this data to provide a seller with an accurate picture of how long it will take for their home to sell is what I love to do.

A market absorption analysis (full deep-dive into similar homes in a specific market) will generate a market absorption rate I can share will sellers.  The market absorption rate provides sellers with their specific rate (rate a which their home will sell, given no new inventory hits the market). First, I start by gathering sales history of the overall Des Moines real estate market, then break it down to match the seller’s property specifically (neighborhood, square footage, bedrooms, baths, age of home – ALL the specifics).

From the example below, this seller’s market absorption rate was 3.3.  This means that if no new homes hit the market, all homes will be sold after a little over 3 months.  “Andrea, how long will it take to sell my house?” I do not have a crystal ball, but having the data to support our pricing strategy makes all the difference! In a balanced market, the absorption rate is 6 (meaning that in 6 months all inventory would be sold).  Given this seller’s rate is 3.3, the seller has a slight advantage and we could hit the market with a more aggressive price.