Indianapolis Real Estate - Absorption Rate

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.

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.

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.

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.

What does absorption rate mean?  

Indianapolis Real Estate Blog, written by Paula Henry, an Indianapolis Realtor and team leader of The Home To IndyTeam at Keller Williams Realty, serving the Indianapolis Real Estate Market.