While the real estate industry is still reeling from a federal jury’s decision to rule against the National Association of Realtors, October’s absorption rates may be feeling like the calm before the storm. There may be candy wrappers blowing gently off the streets on November 1. But October brought no tricks or treats to the Greater Los Angeles area’s housing market. Rather, it seemed the market was doing a balancing act going into the industry’s hibernation months.
Absorption Rates – October 2023
- Burbank – 38%
- Encino – 19%
- Glendale – 39%
- Long Beach – 38%
- Los Angeles – 22%
- Northridge – 41%
- Palmdale – 31%
- Pasadena – 35%
- Rancho Cucamonga – 45%
- Reseda – 40%
- Upland – 36%
- Valencia/Santa Clarita – 38%
The Three Most Commonly Asked Absorption Rate Questions
If this is your first time reading our monthly absorption rate analysis, allow us to illuminate you with the answers to the questions you’re no doubt thinking.
(1.) What is an Absorption Rate?
An absorption rate is a statistic that we use to help us gauge whether a specific neighborhood’s housing market favors buyers or sellers. Most professionals believe an absorption rate of 20% or more indicates a seller’s favor. Absorption rates at or below 15% allude to a buyer’s favor. But these are guides; not set-in-stone rules.
(2.) JohnHart Doesn’t Factor Condos and Townhomes Into Its Absorption Rates. Why Not?
Our clients are overwhelmingly interested in single family homes. Therefore, to ensure our absorption rates most accurately reflect our clients’ interests, we only consider single family homes in our calculations.
(3.) How Do You Calculate Absorption Rates?
We use the following universally accepted formula to calculate absorption rates:
Subtle Surging in Two Communities
The biggest surges (if you can call them that) for October go to both Burbank and Rancho Cucamonga. These two neighborhoods made a modest jump further into the seller’s terrain with a 5% increase each. This is somewhat bigger news for Burbank, breaking its four-month streak of falling absorption rates with this bump. But Rancho Cucamonga holds their own distinction, leaving October with the month’s highest absorption rate: a seller-satisfying 45%.
Pasadena’s Balancing Act
October’s steepest drop wasn’t much more dramatic. Pasadena dropped 6 percentage points down to a 35% absorption rate. Not exactly ringing the dinner bell for buyers, but it’s something. The neighborhood has been more or less hovering around this spot since the summer, so its modest drop comes as no real surprise.
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Encino Keeps It Low
While Encino bumped up an additional 2 percentage points in October, this still keeps them at the lowest absorption rate of all our neighborhoods. The Valley neighborhood is still looking pretty inviting to buyers at a 19% absorption rate. This isn’t technically a buyers’ market. But as we’ve said before: the numbers are guides, not rules.
The Four-Month Plunge
It’s also worth mentioning that Reseda dropped closer to the buyer’s market for its fourth consecutive month in October. July’s plummet was a doozy at 9%, but since then, the neighborhood has only been decreasing by 3 percentage point increments. Therefore, its still very high absorption rate of 40% shouldn’t be a shock.
Neutral Northridge
And the reward for the most tranquil neighborhood, at least where absorption rates are concerned, goes to Northridge. For its third month in a row, the Valley neighborhood has maintained a solid 41% absorption rate. No wonder their property owners are all smiles.
As we said, we’re about to see the housing market go into its usual hibernation. Coupled with the news coming out of Kansas City, it may be an atypical season. If you’re concerned about how this could affect you and your plans, reach out to one of our knowledgeable real estate experts! Otherwise, we’ll see you in November’s absorption rate analysis!
With a brand that says as much as JohnHart’s, Senior Copywriter Seth Styles never finds himself at a loss for words. Responsible for maintaining the voice of the company, he spends each day drafting marketing materials, blogs, bios, and agent resources that speak from the company’s collective mind and Hart… errr, heart.
Having spent over a decade in creative roles across a variety of industries, Seth brings with him vast experience in SEO practices, digital marketing, and all manner of professional writing with particular strength in blogging, content creation, and brand building. Gratitude, passion, and sincerity remain core tenets of his unwavering work ethic. The landscape of the industry changes daily, paralleling JohnHart’s efforts to {re}define real estate, but Seth works to maintain the company’s consistent message while offering both agents and clients a new echelon of service.
When not preserving the JohnHart essence in stirring copy, Seth puts his efforts into writing and illustrating an ongoing series entitled The Death of Romance. In addition, he adores spending quality time with his girlfriend and Romeo (his long-haired chihuahua mix), watching ‘70s and ‘80s horror movies, and reading (with a particular penchant for Victorian horror novels and authors Yukio Mishima and Bret Easton Ellis). He also occasionally records music as the vocalist and songwriter for his glam rock band, Peppermint Pumpkin.
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.
