Absorption Rate

Explore absorption rate in Canadian real estate — what it measures, how it's calculated, and why it matters to market analysis.

Absorption Rate

July 11, 2025


What is Absorption Rate?

Absorption rate is a metric that measures the rate at which available properties are sold or leased in a specific market over a given period.

Why Absorption Rate Matters in Real Estate

In Canadian real estate, absorption rate indicates market health, demand, and pricing trends, and is used by developers, investors, and agents.



Calculation:
  • (Number of properties sold ÷ total available properties) × 100
  • Expressed as a monthly or annual rate



High absorption rates suggest strong demand and a seller’s market, while low rates may indicate oversupply.

Example of Absorption Rate in Action

The city’s absorption rate for new condos rose sharply, reflecting strong demand and declining inventory.

Key Takeaways

  • Measures how quickly properties sell
  • Indicates market demand and health
  • Guides pricing and development decisions
  • High rates reflect strong demand
  • Low rates signal oversupply

Related Terms

Additional Terms

Construction Loan

A construction loan is a short-term, interim financing option used to fund the building or major renovation of a property, with funds disbursed in. more

Certificate of Occupancy

A certificate of occupancy is an official document issued by a municipal authority confirming that a building complies with applicable codes and is. more

Bylaw Variance

A bylaw variance is official permission granted by a municipal authority allowing a property owner to deviate from local zoning or building bylaw. more

Corporate Restructuring

Corporate restructuring refers to the reorganization of a company’s operations, assets, or liabilities, often under court supervision, to improve. more

Consumer Proposal

A consumer proposal is a formal, legally binding agreement in Canada between an individual and their creditors to repay a portion of their debt over. more

Universal Design

Universal design refers to the creation of buildings, spaces, and products that are accessible, usable, and appealing to people of all ages and. more

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