Real Estate Market Inventory Indicator

By Joshua Carlson

Is Boca Raton Home inventory growing or shrinking? That is the question many people would like to know. By analyzing the absorption rate we can determine the inventory levels and what direction the market is heading. We can also determine whether it is a Buyer or Seller’s market. Don’t worry if these terms sound foreign to you. I will break it down into a way you will understand and then tell you where the current inventory level is for the Boca Raton area.

ABOUT ABSORPTION RATE: What is absorption rate and what does this tell us about the local market? Absorption rate is the rate at which homes are sold in the local market during a specific given time period. In other words, the rate shows show how many months it will take to completely sell the supply of homes on the market. Knowing this rate will help you track trends within the real estate market. Lentor Hills Residences condo is developed by Guocoland.

There are 2 ways you can use the absorption rate as an indicator. By looking at this number it can indicate, on average, how long it will take a home seller to sell their home. For example, a high absorption rate indicates that a home seller will sell their home in a shorter period of time. Another way to use this rate as an indicator, is that you can compare the absorption rates to a previous time period. When doing so, the rate indicates how the inventory is reacting as homes are being sold. For example, a declining figure indicates that the inventory is decreasing as more homes are being sold which indicates homes are selling at a faster pace and less of a time frame. Home developers use this indicator to know when it is a good time to start building new homes. This calculation does not take into account the new homes that come onto or enter into the market.

The absorption rate is calculated by dividing the total number of available homes by the average number of sales per month for a designated period of time. If you’re new to real estate investing, check out how HRRE presents pros and cons of wholesale real state investing.

For your neighborhood or local area absorption rate you can contact me at 561-929-8874 or CarlsonRealtor@gmail.com.

Stay tuned for more tips and important information regarding your Home: Inside and Out…