Absorption Rates-Supply vs Demand

So, what is an absortion rate? In real estate, it measures the supply vs. demand for the current housing market. We look at the number of houses that sold in the last 12 months and determine the average # sold per month. Then we calculate the number of month's supply currently on the market. In other words, how many months at the current rate, would it take to sell what is currently being offered.
In a Seller's Market there tends to be 4 or less month's supply, balanced market has 5-7 month's supply and over 7 month's supply in a buyer's market.

Here's what's happening in my world as of July 4, 2009



Harvard has one of the top school systems in the state and is an awesome town. So, why is there such a large supply of homes on the market there? Prices rose steeply in Harvard in the past several years and perhaps they need to come down some more.
Inventory in most towns is lower than two years ago but demand has slowed as well. Acton and Boxborough are experiencing a more balanced market as they have more affordable housing than Concord and Sudbury.
Absorption rates can also vary greatly within price ranges in a given town. You may have a house in Concord in the $900,000's and that absorption rate would be only 5 months, whereas a house in the 1,000,000-1,500,000 may have a lot more competition and thus a longer market time.

For more specific information, feel free to call or email me.

Cheers and Happy 4th of July!!!