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Absorption Rate: What it is, and Why you Should Know it
by Rich Schiffer, Weichert, Realtors 
Before I began my career in Real Estate, I had often heard the terms "sellers market" and "buyers market" but I had never stopped to think at all about what these terms really meant.
Now that I am engaged in this career, and am being looked to as an expert by my clients, I thought I should boil this down in a way that would make it easy to explain to the consumer.  In addition, a recent conversation with Jeff Bellonger tipped me to the fact that this simple concept may be misunderstood by other professionals in the industry also, so this article goes out to everyone who ever wanted to know, and to those who never realized they didn't know about this fundamental measure of market conditions.
ABSORPTION RATE is the mathematical representation of the relationship between supply and demand.  The total amount of available product is divided by the total amount of product sold in the previous month.  The resulting number represents the number of months it would take, at that same pace, to sell the entire inventory of product.
"Normal Market" conditions exist when the Absorption Rate is between 5 and 6 months.
"Sellers Market" conditions ... more

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