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

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