In the realm of real estate absorption rates, it seems that what goes down must come up. At least in the competitive housing market of the Greater Los Angeles area. As we head deeper into the autumn, the sun that shined so brightly on prospective home buyers is slipping behind the clouds, returning favor to sellers. Well, except for one holdout. In October, we sold 1,077 homes in the neighborhoods where we track absorption rates publicly, up from 895 in September. So, despite what you may read, this market still has plenty of health to it. Still, October was certainly a month for the sellers. We’ll get into the specifics, but first, our FAQs.
Absorption Rates – April 2024
- Burbank – 33%
- Encino – 13%
- Glendale – 30%
- Long Beach – 39%
- Los Angeles – 21%
- Northridge – 31%
- Palmdale – 26%
- Pasadena – 34%
- Rancho Cucamonga – 43%
- Reseda – 26%
- Upland – 39%
- Valencia/Santa Clarita – 30%
Our Absorption Rate FAQs
What is an Absorption Rate?
An absorption rate in real estate is a statistic that indicates whether a particular area favors home buyers or sellers. An absorption rate of 20% or more indicates a healthy seller’s market. In this kind of housing market, homes sell rapidly. Sometimes even for over the asking price. An absorption rate below 15% indicates a buyer’s market in which homes often stay on the market longer.
Why Do You Only Consider Single-Family Houses for Sale in Los Angeles?
We only consider single-family houses for sale in Los Angeles neighborhoods in our absorption rate formula. Why don’t we consider townhomes, condos and the like? Because the average JohnHart client is specifically searching for single-family homes. It’s just a matter of accurate representation.
How Do You Calculate an Absorption Rate?
By using this universally accepted formula:
Rising Through a Buyer’s Market
With the exception of one surprise neighborhood, every area that we publicly track either increased further into the seller’s favor or held at the same absorption rate in October. To be fair, most of these were modest bumps. For example, Encino crawled just a single percentage point higher than September for a total absorption rate of 13%. That’s still below the universally accepted threshold of the buyer’s market. And it’s no surprise that it’s also the lowest absorption rate for October. After all, Encino’s been no stranger to the buyer’s market since we’ve been sharing these results.
High Times in Rancho Cucamonga
On the opposite side of the spectrum stands Rancho Cucamonga with a 43% absorption rate; our highest of the month. This lofty absorption rate comes courtesy of the steepest surge of October; an 11 percentage point leap that far outpaces our other neighborhoods. So, if you’re thinking of selling a home in Rancho Cucamonga, consider this your sign!
Burbank Brakes for Buyers
Now to address that rebellious city that dared to shine on buyers while all others surged toward the sellers’ favor (or simply held their ground). Burbank distinguished itself by dropping a single percentage point toward the buyer’s favor after being one of only two areas that surged in September. That percentage point drop brings it down to 33%; still offering plenty of incentive to sellers. But it could still be a hopeful sign for those seeking Burbank homes. With the exception of a two percentage point increase in September, Burbank has been steadily plummeting closer to buyer’s territory since May.
November 2022 saw six of our neighborhoods drop to lower absorption rates. And November 2023 watched seven neighborhoods rise. What can we expect for November 2024? The election certainly has people hesitating to make any long-term financial decisions. But no matter what happens this November, people will need a place to live, and Hector Torres will be here to help them.
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