Bozeman Absorption Rate
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 | November 2024 | 53 | 227 |
One type of Absorption Rate is calculated in “percentage of all homes” sold each month.
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 = 53/227 = 23.3% chance of your Bozeman home selling in one month.
Therefore, it could take over 4 months to sell, 23.3% x 4 months = 93.4%.
A rate above ~18-20% indicates a seller’s market and below ~15-17%, a buyer’s market.
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 = 227/53 = 5.3 months to sell a home in Bozeman in late 2024.
Generally, Average Days on Market decreases as the Absorption Rate increases.
