At first glance, July seemed like a rebound month for LA’s absorption rates (with a few outliers, of course). But what’s not obvious by simply looking at the statistics is that we sold more homes in nearly every market in July than we did in June. Summertime is often one of the hottest times for moving families because the schools are out. But this was still a pleasant sign of just how healthy our markets are in spite of high absorption rates and inventory challenges. Perhaps things aren’t as bad as the media makes out… who’d have thought? We’re going to start by answering our traditional FAQs, so if this isn’t your first absorption rate rodeo, feel free to skip to the good stuff below.
Absorption Rates – July 2024
- Burbank – 37%
- Encino – 22%
- Glendale – 41%
- Long Beach – 41%
- Los Angeles – 22%
- Northridge – 48%
- Palmdale – 32%
- Pasadena – 35%
- Rancho Cucamonga – 35%
- Reseda – 32%
- Upland – 43%
- Valencia/Santa Clarita – 28%
Absorption Rate FAQs
First time reading our absorption rate analysis? Here are some of our most commonly asked questions.
What is an absorption rate?
An absorption rate is a statistic that we use to determine whether a housing market favors buyers (a buyer’s market) or seller’s (a seller’s market). The universally accepted threshold of the buyer’s market is 15% with anything below indicating favorable conditions for buyers. Favorable conditions for home sellers are indicated by a 20% absorption rate or higher. Keep in mind that these are simply guidelines as opposed to rigid rules.
JohnHart only factors single family homes into its absorption rates. Why?
The reason we only consider single-family homes in our absorption rate analysis is to mirror the overwhelming interests of our clients. The vast majority of our clients are strictly interested in single family homes. While we’re happy to help clients purchase condos and townhouses, we feel including these in our absorption rates gives a skewed impression of the market that interests our clients. Therefore, we only factor single-family homes into our calculations.
How do you calculate an absorption rate?
To calculate absorption rates, we adhere to this universal formula:
Northridge Rises to the Top (Again)
The biggest increase of the month isn’t exactly surprising. Sudden dramatic surges have become something of a habit for Northridge. The Valley community rocketed even further into the seller’s favor, surging by 9 percentage points for a total absorption rate of 48%. And, yes, that is the highest absorption rate for all of our communities in July.
A New High in Low Absorption Rates
Perhaps more interestingly, Encino, which officially spent June at the threshold of a buyer’s market, was just behind Northridge with the second-highest surge of July. But even with its 7 percentage point increase, it ties with Los Angeles proper for the lowest absorption rates of July at 22%.
A Record Low for These Twin Communities
The steepest drop occurred in the Valencia/Santa Clarita area where absorption rates plunged 10 percentage points. This brings the twin communities down to a collective 28% absorption rate. And, yes, that’s the lowest it’s ever been since we started reporting their numbers. Dreaming of a white picket fence in Valencia/Santa Clarita? Now could be your best time!
A Healthier Market Than You Think
The rest of the absorption rate increases and decreases for July weren’t all that dramatic. But it was still a notable month, if not for the absorption rates we discussed, then for the inventory that we moved. It’s a strong indicator of the actual health of this market. Don’t let anyone tell you that you can’t meaningfully pursue your real estate goals here. Reach out to one of our expert real estate agents today to find out how this market works with your vision!
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.
