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You find reliable data that provides essentially two things: the number of particular kinds of property you want to analyze (say new single family homes) and the number of them both built and being sold over the course of a period of time. Then you see what the net number of units available at any given time are compared to the number of units sold during the same time period. How they are "absorbed" (i.e. become sold in the marketplace) is the function of how many are left over at the end of the selected time period. A very simple example (one that doesn't take into account units that come on the market during the year) is that say on January 1 there are 100,000 sf new single family homes in the marketplace, no new ones are built during the year, and at the end of the year 10,000 are left (we're talking hypothetically of course). This would be a "90%" absorption rate for the year.

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Q: How do you calculate real estate absorption rates?
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