My New Blog

One of the five statistics I use every month in my blog is the Absorption Rate for Real Estate in the city of Rochester, MN.  The Absorption Rate tells home buyers and sellers a very important piece of statistical information.  It tells how many months it would take to sell all the homes for sale in Rochester at the current rate they are selling.  The two figures used to arrive at the absorption rate are the homes that are currently for sale and the total number of homes sold during a specific period of time - i.e. one month or six months.  Divide the former by the later and you will come up with the monthly absorption rate. 

The thing to remember about the monthly absorption rate is that, this number looks only at current inventory – it does not take into consideration any additional homes that will come on the market in the future.  Another way to say this is, if no homes are listed in Rochester until the last current listing sells, how long will it take to clear all of the current inventory that is listed on the market?  The absorption rate is currently running about 7.5 months for Rochester for August 2011.  Last year at this time, the figure was close to 9 months.  This reduction in the absorption rate is a positive for sellers.