Indianapolis Real Estate - Absorption Rate

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Indianapolis Real Estate - Absorption Rate

June 28th, 2008 categories: Indianapolis Real Estate News, Indy Home Sellers, Indy Market Trends

Recent requests for absorption rates prompted me to take a look at the current absorption rates in some of the cities around the Indianapolis area.

The absorption rate is based on supply and demand and indicates the month’s supply of homes available when we compare the latest month’s sales against the available inventory. The data provides an estimate of time on market. What the figures mean has been debated. The generally accepted interpretation is:

0–3 months = Sellers Market
4–6 months = Neutral Market
6+ months = Buyer’s Market

Although the numbers do give us an idea of what is happening in the real estate market, they don’t provide a complete story.

The following figures are a broad look at the individual cities.

City	May Sold	Current Inventory	Absorption Rate
Avon	90	539	5.9 Months
Brownsburg	74	426	5.7
Plainfield	35	189	5.4
Wayne Township	135	1273	9.4
Pike Township	118	857	7.2
Carmel	139	943	6.7
Zionsville	40	356	8.9
Fishers	151	875	5.7

When we break down the figures a bit, we may get a different story. Let’s see what the numbers tells us when we break down the absorption rate by price point for individual real estate markets around Indianapolis.

Avon Absorption Rates

Most of the homes in Avon are priced between $100,000 – $200,000 and the majority of homes sold in Avon are under $300,000. The higher the price point, the higher the absorption rate. When averaged by price point, homes in the $100,000–200,000 price range are closest to the average for the city.

Avon	May Sold	Current Inventory	Absorption Rate
$100-200K	59	335	5.6 Months
$201-300K	13	100	7.7
$301-400K	5	41	8.2
$400K+	3	41	13.6

Carmel Absorption Rates

The averages for Carmel are a bit different. Most of the real estate inventory in Carmel is priced below $400,000. Homes in these price ranges are close to the city averages, with many below the average absorption rate.

Carmel	May Sold	Current Inventory	Absorption Rate
$100-200K	27	179	6.6 Months
$201-300K	44	223	5.0
$301-400K	33	170	5.1
$401-500K	11	86	7.8
$501-600K	4	58	14.5
$601-700K	7	54	7.7

Zionsville Absorption Rates

Homes in Zionsville typically range in a higher price point than other cities within the Indianapolis area and suburbs. Prices below $600,000 sell well and are below the city average Absorption rate. Homes above $600,000 in Zionsville sell much slower and distort the true absorption rate as a whole.

Zionsville	May Sold	Current Inventory	Absorption Rate
$100-200K	7	45	6.4 Months
$201-300K	12	53	4.4
$301-400K	8	73	9.1
$401-500K	5	38	7.6
$501-600K	6	27	4.5
$601-700K	1	33	33
$701-800K	1	87	87

What does absorption rate mean?

Tags: Indianapolis+Real+Estate, Absorption+Rates

This entry was posted on Saturday, June 28th, 2008 at 8:31 pm and is filed under Indianapolis Real Estate News, Indy Home Sellers, Indy Market Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.