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Absorption Rates In Central Madison Condo Market

October 7, 2007

There has been a lot of discussion of the overstock of downtown Madison condominium in the recent months.  While as a general rule there is a large supply of condominiums for purchase throughout Madison, I took a look on a per development basis to get a sense of the true picture.   

With the real estate market in a state of flux, absorption rates are increasingly used as an indicator to assess how long it would take to sell ALL the existing condos in each condominium, assuming the rate of sales stays constant and no new listings are added to the inventory. Additionally, absorption rates are the best way of tracking market performance. They are usually used to indicate “overall real estate market performance,” or how an entire market is doing.


To calculate monthly absorption rate, I have taken all the condos that are currently on the market in each building in the central Madison living area and divided them by the number of listings that have sold in their respective condo in the past six months and divided that number by six. Many people compute absorption rates by using the number of sales in a one month period, but I chose to use a six month sales average so it “smoothes” the seasonal “peaks and valleys” to gauge the true overall activity.

The data was based on information from the South Central Wisconsin MLS for the period 2/1/07 through 9/1/2007.

Here’s the math:

Number of listings in Developments Researched:  110

Number of sales in the last six months: 99

99 divided by 6= 16.5 sales per month

Number of listings: 110 divided by number of sales per month: 16.5= 6.6 months of supply

The chart through the link illustrates the absorption rates for the Metropolitan Place, Marina, Nolen Shore, The Loraine, 100 Wisconsin, Capitol Point, 4th Ward Lofts, Bedford CourtUnion Transfer, Monroe Commons and The Livingston and shows how each building is performing relative to the amount of inventory and the amount of sales.

Absorption Rate

One Comment leave one →
  1. May 12, 2010 12:52 am

    Helpful write-up. Thank you for posting

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