August 2024 was a great month for home buyers according to our absorption rate stats. While it wasn’t one of those months with a near-unanimous pull toward the buyer’s favor, the surges were (mostly) modest. And the drops tended to be much more significant, plunging certain communities into absorption rate depths we haven’t seen in years. Most of the usual suspects are doing what we’ve come to expect from them, so don’t expect any big surprises. Overall, the message is some much-needed good news for the home-buying hopefuls while still keeping this largely a market that favors the seller. If you’re new here, start with our FAQs or this might all sound like an instruction manual. But if this isn’t your first absorption rate rodeo, feel free to scroll on down to the specifics.
Absorption Rates – August 2024
- Burbank – 32%
- Encino – 18%
- Glendale – 32%
- Long Beach – 32%
- Los Angeles – 22%
- Northridge – 35%
- Palmdale – 26%
- Pasadena – 36%
- Rancho Cucamonga – 36%
- Reseda – 35%
- Upland – 34%
- Valencia/Santa Clarita – 33%
Absorption Rate FAQs
Got questions? Let’s start with the big three:
What is an absorption rate?
An absorption rate is a statistic used to indicate whether the housing market in a given community tends to favor home buyers or home sellers. Nationally, an absorption rate of 20% or higher indicates a market with conditions favoring home sellers. Absorption rates of 15% or lower indicate favor for home buyers. But, as our very first absorption rate blog illustrated, these thresholds are guides and not rules.
Why doesn’t JohnHart Real Estate factor condos and townhouses into our absorption rate statistics?
We don’t consider townhouses or condos when calculating our absorption rates because, in most cases, they don’t match the interests of our clients. JohnHart Real Estate’s clients are overwhelmingly focused on single-family homes and we wanted our absorption rates to accurately reflect this interest.
How do we calculate the absorption rate for a community?
By using the universal formula:
Refreshment in Northridge
The steepest absorption rate drop for August 2024 should come as no surprise. Something had to give in Northridge after July’s 9 percentage point surge. Yet, for a community that can even breach the 50% marker occasionally, Northridge’s 13 percentage point drop to a 35% absorption rate in August is downright refreshing. We haven’t seen Northridge this close to the buyer’s favor since February. And that highlights the consistent demand in this Valley community. Thinking of selling a home in Northridge? It’s pretty much always a good time.
Opportunity in Two High-Demand Communities
Not too far behind that leading 13 percentage point drop, Glendale and Long Beach tied for the second steepest drop of August, plummeting 9 percentage points. This puts both communities at a 32% absorption rate. And while that’s not very close to the buyer’s market, it may be as good as it gets for prospective home buyers seeking properties in these coveted areas. We haven’t seen Glendale or Long Beach this low since 2022!
Highlights Illuminate an Easy August for Home Buyers
The biggest surge of the month was a 5 percentage point increase in Valencia/Santa Clarita for a 33% absorption rate total. A bump is still a bump, but this one was modest enough to keep these Ventura County communities in familiar territory.
With Northridge subdued in August, the highest absorption rates of the month went to Pasadena and Rancho Cucamonga. Each community raised a single percentage point for an absorption rate of 36%. And if that’s the highest absorption rate for August, you can see why it was an easier time for home buyers.
And the lowest? It should come as no surprise that Encino slipped 4 percentage points for an 18% absorption rate. No stranger to flirting with the buyer’s market, Encino was even lower at the beginning of the summer.
Could Things Be Balancing Out?
Overall, August indicates a healthier market than you might expect if you rely solely on sensationalist news headlines. Even looking back to August 2023, the absorption rates indicate a housing market that is much more balanced. It will be interesting to see what September brings! But in the meantime, if you have absorption rate questions we didn’t answer or you think you see opportunity opening up in your favorite neighborhood, reach out to one of our talented agents!
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.
