Rapid City real estate - Absorption rate what? It's going to take HOW long?

Rapid City real estate and the absorption rates therof.

Big terms need an explanation first. An absorption rate is the number of months it will take the current inventory to sell based upon how homes have been selling in the past 6 months. (or year, or whatever rate you want to use)

So...you have 60 homes available in a certain area.

There have been 10 homes sold in the past 6 months.

This puts the rate at 1.66 homes sold per month.

Based on that rate, it will take 36 months to sell off those 60 homes. (Calculated 60 actives/1.66 homes = 36 months)

This just shows another way to see the affect of the market on various areas or price ranges.

Here is the absorption rates for some of the Rapid City and surrounding communities (I won't bore you with the whole list), ran on the 15th of February, 2011:

Price Range Actives Months Supply

0 to 50,000 8 1.85

100,000 to 130,000 111 7.66

160,000 to 190,000 185 6.52

220,000 to 250,000 76 8.60

310,000 to 340,000 29 14.5

370,000 to 400,000 21 25.25

490,000 to 520,000 6 36

610,000 to 640,000 5 30

700,000 and up 35 210 (that's 17.5 years)

Basically, this supports what I have been saying all along - homes under the $200,000 range...even $250,000...will sell at a decent rate. Once you get over that $300,000 range, the buyer pool is smaller and fewer sales result.

And there's a whole heaping lot of homes over the $700,000 mark. Lots to choose from!

Of course, this report is MLS wide. You could figure the rate for a subdivision or area to hone in on more specific data.

Information galore!

- Tristan

Prudential Kahler REALTORS
Rapid City Home Sales Specialist
www.rapidhomesonline.com