Bonita Springs Absorption Rate

Bonita Springs Absorption Rates| Existing Inventory | Closed Sales

Yesterday, I taught a brief class on Absorption Rates at a local real estate office and ended up returning after our office meeting today to make sure anyone that may have missed the class knew just what I was talking about and how best to show their Seller's the reality of their situation. Yes, we not only share our information at KW, but we also teach each other. That's how we roll. Remember, real estate is local and even hyper-local. Every neighborhood is different, so by all means do not panic when you read the sample equation. The numbers that apply to your community will be different. Inventory influxes and sales also alter the data.

First, what is an Absorption Rate? The Absorption Rate is the ability of the real estate market to sell off all of the houses that are for sale. For example, if 10 homes are sold every month and there are 120 homes for sale then it will take 12 months to sell all of those homes. If there are 240 homes for sale then the absorption rate will be 24 months or 2 years.

If you would like to sell in 12 months then you need to take the absorption rate into account. In the above scenario with 240 homes for sale, we know that only 1/2 of them will sell in the next 12 months.

To price a property correctly it would have to be in the lower 50% of the price range for similar properties in order for it to sell in the next 12 months. Ideally, to sell in the next 6 months it would have to be priced in the lower 25% of the competition.

A portion of this article courtesy of Outer Banks Real Estate Sales.

Sounds simple enough, doesn't it? Unfortunately, many Sellers of Bonita Springs real estate have no idea what the Absorption Rate is for their style of home or their community.

This is why you need to know the Absorption Rate of your home before you even list.

My example is for an Oakmont Model at Village Walk of Bonita Springs. Village Walk has only four floor plans from which to choose so this is an easy exercise. Keep in mind that the figures used are for MLS properties and exclude builder inventory and the information is subject to change and not guaranteed. It is simply a snapshot in time guideline of listings that were on the market and sold within one year of March 4, 2008 - per Sunshine MLS of Southwest Florida.

  • Current active listings of Oakmont floor plans in Village Walk - 13 units
  • Closed sale listings of Oakmont floor plans in Village Walk - 6 units

6 Closed sales divided by 12 (months) = .5 (the rate of absorption)

13 Active listings divided by .5 (the rate) = 26 months

26 months divided by 12 = 2.16 years

Not know how long it could take to sell off existing inventory is a costly mistake. There is no way to effectively price your Bonita Springs home for the market without knowing the absorption rate for your community or style of home.