Absorption Rate Analysis: January 2024 Brings a Late Holiday Gift for Buyers

We’ve come to expect lower absorption rates in January, but January 2024 more than understood the assignment. All except one neighborhood dropped further into the buyer’s favor. One dropped further toward the buyer’s favor than we’ve ever seen in a single month. Another has officially camped out at the threshold of the universally accepted buyer’s market. And, of course, there’s that one rebellious neighborhood that just has to go further into the seller’s favor, even as the city around it drops closer to the buyer’s benefit. So, let’s take a closer look at a month that shaped up to be a belated gift to Greater LA homebuyers. 

Absorption Rates – January 2024

• Burbank – 26% 
• Encino – 15% 
• Glendale – 37% 
• Long Beach – 42% 
• Los Angeles – 21% 
• Northridge – 46% 
• Palmdale – 28% 
• Pasadena – 32% 
• Rancho Cucamonga – 42% 
• Reseda – 39% 
• Upland – 42%
• Valencia/Santa Clarita – 31% 

Absorption Rate FAQS

If you know this drill by now, you can skip to the good stuff below. Otherwise, you’re likely scratching your head, so let’s answer a few of your questions.

What’s an absorption rate?

An absorption rate is a statistic that we use in the real estate industry to gauge whether a market favors the buyer or the seller. Universally speaking, absorption rates of 20% or higher indicate a strong market for home sellers. On the other hand, absorption rates of 15% or lower indicate a market that favors homebuyers. But, as a quality real estate agent will tell you, these numbers are guides, not rules. 

JohnHart Real Estate doesn’t factor condos and townhouses into its absorption rates. Why?

Our research shows that the vast majority of JohnHart Real Estate’s clients want single-family homes. While we sell (and even sometimes lease) condos and townhomes, we feel that an absorption rate accounting for only single-family homes is more representative of our clients’ interests. 

How do you calculate your absorption rate statistics?

We use this universally accepted formula: 

Record Breaking Burbank

Let’s start this exploration of January 2024’s absorption rates with a closer look at that record-breaking drop. Surprisingly, it was Burbank that plummeted a staggering 19 percentage points closer to the buyer’s favor. Though this is probably a short-lived victory for prospective Burbank homeowners, it’s doubly impressive. That’s because Burbank is breaking another kind of record with this drop. 

Since August 2022, the month we first started publishing our absorption rates, Burbank has never had an absorption rate lower than 30%. Therefore, 26% is the closest we’ve seen this popular community get to the buyer’s favor. So, if you’ve been wanting to buy property in Burbank, we’d recommend reaching out to your agent pronto. Because we have a feeling we’ll be seeing Burbank rocket back up in no time. 

Plummeting-a-Plenty

Burbank’s colossal drop shouldn’t distract from another massive plunge happening just to the southeast in Pasadena. We witnessed a drop of 17 percentage points, bringing the San Gabriel Valley city down to a 32% absorption rate. So, no reason for Pasadena sellers to sweat, but still impressive. 

While Burbank and Pasadena stole the thunder in January, we saw notable drops all over the Greater Los Angeles area. Glendale and Reseda dropped 12 percentage points each. Valencia/Santa Clarita dropped 11 percentage points. Upland dropped 10 percentage points. January was kind to buyers, to say the least.

Encino Shines on Homebuyers Again

Despite a more modest plummet by comparison, no neighborhood was sweeter on buyers than Encino. The San Fernando Valley community dropped 8 percentage points for the lowest absorption rate of January: 15%. And, if you’ve been paying attention, that’s a magic number. Universally speaking, 15% is the upper threshold of the buyer’s market. 

If you’ve really been paying attention, you’ll know that this isn’t much of a shock for Encino. The neighborhood has dipped lower on several occasions, spending more time in the buyer’s favor than any other neighborhood we service. That being said, we haven’t seen Encino drop this low since last January. And it surged to 20% the following February, so you might want to hurry with any pending offers on Encino properties. After all, history often rhymes. 

Northridge Goes Against the Grain

January’s fly in the buyer’s ointment is none other than Northridge. This community bucked the downward trend, rising 4 percentage points. This culminates in a 46% absorption rate for the valley neighborhood, earning the highest absorption rate of the month. While Northridge has grown quite comfortable deep into the seller’s territory, Long Beach, Rancho Cucamonga, and Upland are waiting right behind it to steal its crown at 42%. 

Adapt Your Strategy for the Coming Months

If February 2023 is anything to go by, we can expect most of these neighborhoods to surge next month as the market shakes off the holiday hibernation. But if you’re looking to strategize, you can’t beat a tailored approach from a real estate professional. Reach out to one of our agents today to start finetuning your buying or selling strategy for the months ahead!