May 132011

Absorption rate and the London Ontario real estate market.

The absorption rate is a simple measure of supply and demand. In its least complicted form it is calculated by dividing the number of active listings by the number of sales. For example. If a given month had 250 sales and 1000 listings then the calulation would be 1000/250= 4 months supply of inventory.

As a guide line; less than 4 months supply is thought of as a seller’s market, 4 to 6 months supply is a balanced market and greater than 6 months supply is a buyer’s market.

In the graph below:

  • early 2009 was inthe doldrums following the financial crisis of late 2008
  • Supply levels are higher in 2011 than 2010
  • With a higher “inventory” of homes in our market, home sellers will have to be increasingly aware of their home’s appeal, pricing and market conditions.

    Attractive homes at a fair price are still in demand, but they may take longer to sell than last year. To find out how your home fits in today’s market, get a Free Market Evaluation

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    Disclosure Statement: Although the Information displayed is believed to be accurate, no warranties or representations are made of any kind.

    The London and St. Thomas Association of REALTORS® represents nearly 1,500 real estate brokers and sales representatives from Middlesex and Elgin Counties. As members of the Canadian Real Estate Association, LSTAR members may use the REALTOR® trademark, which identifies them as real estate professionals who subscribe to a strict code of ethics. The Association operates the local Multiple Listing Service® (MLS®) and provides ongoing professional education courses for its members. It also participates in the Ontario Real Estate Association’s Quality of Life program.

    MLS® is a registered trademark of CREA the Canadian Real Estate Association

  One Response to “Another measuring stick for the London real estate market”

  1. Very informative article! Great blog.

    Derek H.