Absorption Rates Show Improved Market Conditions

The absorption rate poses the question:

How many months will it take to sell the existing inventory of listings within a given period of time?

So we looked at the number of active listings on May 22, 2015 and the number of sales over the six months leading to May 22, 2015. We then found a previous article in which we looked at the number of active listing on April 30, 2013 and the number of sales leading to that date.

The Absorption Rate Helps Identify Market Conditions

The absorption rate helps determine whether we are in a buyer’s market, a balanced market or a seller’s market. It helps sellers to decide how aggressive or conservative to be with pricing in an effort to better position the listing in the marketplace. If the trend is increasing it’s turning into a buyer’s market, if the trend is decreasing the market could be heading into a seller’s market.

Interpreting Absorption Rates

  • 5 to 6 Months Supply equals a Balanced Market
  • Under 5 Months Supply equals a Seller Market
  • 7 Months Supply or more equals a Buyer Market
  • Over 9 Months Supply equals an extreme Buyer Market

Indeed the Market has changed since 2013 as indicated by the following results:

City

Listings at May 22-15

Month’s Supply 2015

Listings at Apr. 30-13

Month’s Supply 2013

Fort Erie

364

7.6

419

11

Lincoln

102

3.7

97

7.4

Niagara Falls

493

4.5

425

6.3

Niag-on-the-Lake

223

7.6

229

14.2

Port Colborne/ Wainfleet

170

6.5

198

10

St. Catharines

549

3.3

434

4.4

Thorold

135

5.2

93

6.5

Welland

236

4.0

232

6

West Lincoln

28

5.1

36

8.6

Fonthill

148

7.6

 

 

The Fonthill market only shows the absorption rate for 2015 because we unintentionally missed recording the rate in 2013 and, with our apologies, cannot provide it.

As indicated, the months of inventory has declined in every market and in some quite dramatically. For more information, please notify us.  

Eugene Pilato

Eugene Pilato

Broker of Record
CENTURY 21 Today Realty Ltd., Brokerage*
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