Absorption Rate
Categories: Accounting, Metrics, Trusts and Estates
Lotion and homes. That's what this one's about. You should consult Bobbie Brown on the former; we'll handle the latter. A builder just received clearance to destroy 1,000 acres of a Saguaro Cactus national forest upon which to build tract housing. Blammo. Two thousand homes, each on a half acre, materialize almost out of nowhere. How quickly will they sell or be absorbed into the marketplace as buyers step up to shell out 350 grand for a 3-bed, 4-bath...shoebox? The rate is a monthly one, such that if 20 homes each month are sold, then the absorption rate is...slow. Only 1 percent of the homes for sale in that area are being absorbed monthly. A normal builder would hope for 10x that number.