Ada County Absorption Rate | May ’06 to Nov ’10

The absorption rate looks at how many homes are for sale verses how many are selling.  This ratio, expressed in months, indicates the supply & demand of the market.  For example, if there’s 1000 homes for sale, and 100 sell in a given month, the absorption rate is 10 months (1000 divided by 100).

The lower the absorption rate, the more demand and less supply.

I’ve been tracking the monthly absorption rate for Ada County since May 2006.  Here’s how the absorption rate has trended over the last 4.5 years.  As you can see, it was the lowest in May of ’06 at about 3 months which was during the real estate boom.  Ada County peaked in January of ’09 at 16.2 months.  Last month, Ada County was down to 5.6 months.

While this is a very useful measure to follow, the number of foreclosures is equally important.  If it were not for the number of foreclosures, the supply & demand are extremely balanced…. in fact even beginning to lean towards the sellers favor.  However, as you can from the following graph, foreclosures continue play a major influence in the market accounting for about 50% of the homes sales.

Prices continue to soften (although at a very slow rate).  You can start your search for Idaho foreclosures by looking for short sales & bank-foreclosures on my website.  If you have any questions about the market, buying foreclosures, or anything else don’t hesitate to let me know.