Absorption

Absorption plays a major part in the commercial real estate market in Las Vegas, Nevada in that knowing the absorption rate for a particular property type in a particular area tells an appraiser whether a market is in balance or not as of the absorption study date.  The historical rates of absorption can offer some indication of future sales in a market that has a constant or steady growth rate.  When, however, the market is moving dramatically in an upward or downward direction, past absorption may not a good indication of future sales.

The residential real estate market in Las Vegas has seen several months of dramatic downward movement with regard to absorption.  The Summer of 2008, however, has seen a turn around in single-family sales (See The Las Vegas Real Estate Report for market statistics).  Few new homes are being constructed, and the absorption of used home put on the market has been strong.  Sales prices, however, have continued to fall from the middle $ 300,000 range to about $ 190,000 in October of 2008.  

Absorption is tied to the supply and demand for a particular property type, to existing inventory and to the number of properties under construction.  The inability to secure credit has also be a major cause for reduced absorption.    

Contact us with your questions or concerns regarding absorption or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be e-mailed at grigdon@cox.net.  

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.