An Excel Worksheet & Explanation of Caluculating Housing Absorption Rates

Posted by Diversified Property Services at 9/27/2007 10:23 PM
Categories: How to Do

clipart of news print housesI have Excel sheets set up to do comparisons of days on market, average sales price and every other statistic on housing I can think of that I may every need for real estate sales or real estate appraisals.  Here is the Excel worksheet I use, that you are welcome to utilize.

Or read on to do it the manual way.....This is a simplification of the process: Choose your period (typically last twelve months, but I recently had a lender ask for a 3 month absorption rate);

  • Find the total number of sales for the area (this can also be narrowed by price range, it really depends on the type of analysis);
  • Find the number of active listings for the same parameters; divide the sales by the active inventory. 
  • There is your absorption rate.

This can be really simple or get very complex, depending on the need. 

  • Then to determine if the marketing time and if there is an oversupply, take your absorption rate 
  • Then divide your current listings in your market area by the absorption rate. 

For example, during 2006 in zip code XXXXX,  the MLS shows 450 sales.  450/12 = 37.5 sales per month.  The MLS shows a total of 372 active listings in zip XXXXX.  372/37.5 = 9.9 months supply of active listings in  the MLS indicating an oversupply and a marketing time exceeding 6 months.

You can see the results of a recent housing analysis of the Athens, Georgia area on my blog sites All About Athens GA or GA Real Estate Appraisal.  Having these statsistics on housing available to the public recently lead to several media opportunities including these quotes on Athens Georgia Housing and speaking to 30+- mortgage loan officers last Friday at their monthly luncheon...just one more way to differentiate yourself from the competition.

  

 

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