Absorption Rates

[Robert Autorino]

Hi All,

I'm in the process of evaluating some areas that I tend to invest in, however I'm not too sure of what my #'s are showing me,for the fact that it seems there is a rate of home sales of 1.60 days, giving me an absorption rate of 40.0.

Can someone help check my numbers below and let me know if my calculations are correct or make sense please? Any help would be great!

Is this a buyer, Sellers or Normal Market?

This is for 1-4 Family homes.

THE DATA:

• 1. Time Frame = 243 days (total days from January 1, 2013 to Sept 1, 2013)
• 2. Number of Sold Homes = 152 (from January 1, 2013 to Sept 1, 2013)
• 3. Number of Active Homes = 25 (at the end of Sept 1, 2011)

NEIGHBORHOODS	Homes Sold	Active Homes	Rate of Home Sales	Absorbtion Rate
N1	152	25	1.60	Days
N2	74	11	3.28	Days
N3	142	22	1.71	Days
N4	119	20	2.04	Days
N5	86	17	2.83	Days

MY CALCULATIONS:

• Rate of Home Sales = 1.60 – 1 home is sold every 1.6 days. This number is found by taking 243/152 (Time Frame/Number of Sold Homes)

• Absorption Rate = 40 Days??. Found by taking 25 x 1.60 (Number of Active Homes x Rate of Home Sales)