Bozeman Absorption Rate ⇓ in 2023
How To Calculate Absorption Rate (AR) – What’s Bozeman’s Absorption Rate?
Absorption Rate (AR) indicates how long it takes a Bozeman home (or any property) to sell in a particular area and in a specific time period.
EXAMPLE CALCULATIONS BELOW:
AREA | TIME FRAME | NUMBER HOMES SOLD | NUMBER HOMES FOR SALE |
All Bozeman | Feb 2023 | 39 | 158 |
One type of Absorption Rate is calculated in “percentage of all homes” sold each month.
![Number Bozeman homes for sale inside and outside city. Photo Number Bozeman homes for sale inside and outside city.](https://www.taunyafagan.com/wp/wp-content/uploads/2021/04/Number-Bozeman-homes-For-Sale-Bozeman-Inside-and-Outside-City.png)
This form of Absorption Rate is calculated by dividing the number of active homes for sale in a given month by the number of homes sold in a given month.
(You can use any time period, as long as you adjust the number of homes sold to coincide with that period.)
Absorption Rate as Chance of Selling:
Sold Homes/Available Homes For Sale = 39/158 = 24.7% chance of your Bozeman home selling in one month. (Therefore, it could take about 4 months to sell, 24.7% x 4 = 98.8%.)
A rate above ~18-20% indicates a seller’s market and below ~15-17%, a buyer’s market.
![Number of Bozeman homes sold inside and outside city. Number of Bozeman homes sold inside and outside city.](https://www.taunyafagan.com/wp/wp-content/uploads/2021/04/Number-of-Bozeman-homes-sold.png)
Bozeman, Montana’s AR percentage comes in higher than 18-20%, so we are still in a buyer’s market, but just barely.
A second type of Absorption Rate calculation results in “number of months to sell.”
Absorption Rate as Months To Sell:
Homes For Sale/Sold Homes = 158/39 = 4.05 months to sell a home in Bozeman in early 2023.
Generally, Average Days on Market decreases as the Absorption Rate increases.