By now, 8 months into publicly releasing our absorption rate data, we’ve become pretty accustomed to the Greater Los Angeles area favoring the seller. But this is the first time we’ve seen every neighborhood we monitor move deeper into a seller’s market. So, if you’ve been thinking about selling your home, now might be a great time to stop thinking and start doing. We haven’t seen a neighborhood in the buyer’s market since January! If this is your introduction to absorption rates, we’ll break down our FAQs next. But if you’ve been following our monthly Absorption Rate Analysis, you know the drill. Feel free to skip ahead!
Absorption Rates – March 2023
- Burbank – 53%
- Encino – 25%
- Glendale – 53%
- Long Beach – 51%
- Los Angeles – 30%
- Northridge – 45%
- Palmdale – 37%
- Pasadena – 42%
- Rancho Cucamonga – 58%
- Reseda – 46%
- Upland – 52%
- Valencia/Santa Clarita – 56%
Absorption Rates – FAQs
If you’re unfamiliar with absorption rates, you’ve likely got questions. And we’re betting they go a little something like this:
(1.) What are absorption rates?
In the housing market, an absorption rate is a statistic used to determine whether a market favors the buyer or the seller. In the U.S., its universally accepted that absorption rates ate or below 15% favor the buyer. Absorption rates in excess of 20% favor the seller. Of course, there’s a lot of leeway when you get into the nuances of specific housing markets. And the Greater Los Angeles area has some unusual ones to say the least!
(2.) Why don’t you count condos or townhouses in your absorption rate analysis?
We’ve found that our clients are overwhelmingly interested in single family homes. Therefore, we figured that only counting single family homes would more accurately represent our clients’ interests.
(3.) How do you calculate your absorption rates?
We figure our absorption rates by using the same formula as everybody else:
Encino Favors Sellers Again… But Not By Much
As we said in our introduction, there were absolutely no drops toward the buyer’s market in March. The only consolation for buyers were the neighborhoods that didn’t surge quite so dramatically. Reseda had the least intense bump, rising just four percentage points from February’s 42% to 46%. That still keeps it well over the threshold of the buyer’s market.
Contextually, Encino’s bump was fairly modest as well, only rising 5% to achieve a 25% absorption rate for March. This also makes Encino the lowest absorption rate of our neighborhoods in March. If you’re planning on buying a home, Encino continues to be one of the most favorable markets in the region, even if they have strayed into seller’s territory over the last couple months. They’ve frequently held the lowest absorption rate of our neighborhoods. March isn’t giving us any surprises there!
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Absorption Rates Show Hot Neighborhoods Getting Hotter
The neighborhood of Upland surged the most fiercely into the seller’s market with a rocketing additional 21% bringing their total to 52%. We’ve only just recently started releasing Upland’s absorption rate statistics, so it’s interesting to see so much drama right out the gate.
Right behind them, tied for the second biggest surge of March is the other new neighborhood on the list, Rancho Cucamonga. Not only did they see a significant leap in the seller’s favor, they are holding the highest absorption rate of any of our neighborhoods with 58%. This is a hot neighborhood and, not coincidentally, the site of the next JohnHart Campus office. Therefore, we’re not shocked to see numbers spiking in the seller’s favor.
Ups and Downs in Pasadena
Rancho Cucamonga shares the second highest jump with Pasadena, a neighborhood that’s become a bit less predictable entering 2023. For most of last year, Pasadena hovered within 5% of a 30% absorption rate. But if you’ll recall, February watched the neighborhood’s absorption rate drop to 23%, the lowest since we’ve been publishing these results. Now, it’s jumped up to 42%; its highest. Will Pasadena level out?
So, it’s a great time to be a seller. And even though March wasn’t fantastic for buyers, we’ve been on this see-saw before. We know it doesn’t stay up forever. So, if you’re shopping, keep looking!
After working with, and for, many different real estate firms, it became apparent to Harout that there was a major disconnect between what consumers needed/wanted and the service that was being provided to them. It was upon this realization that Harout founded and opened JohnHart Real Estate; and as the CEO/Principal Broker he has continued to break from the norm and redefine real estate with an insatiable appetite to give his clients the service and attention they deserve.
The tips provided here are gold for both first-time homebuyers and seasoned investors. A must-read for anyone in the real estate market!Soldbyjandf