Yesterday I showed the state of the market by looking at under contract percentages. Today, let’s look at absorption rate. Absorption rate relates current inventory to sales turn rate and comes up with how many months it would take to sell the current inventory given the historical sales rate. The lower the number, the more the inventory is turning. A high number denotes a buyers market and a low number denotes a sellers market.
The absorption rate in Boulder County ranges from around 5 months to over 25 months in the mountains. This means that if no new listings were to go on the market, it would take two years to sell all of the homes currently on the market in the mountains.
Looking at absorption rate by price range is even more revealing. for the lowest priced properties the absorption rate is 7 months for homes listed above $1.5 million it would take over three years to clear the inventory. A normal balanced market is 6 months or less.