We’ve never seen a month like January 2025 in the history of publishing our absorption rates. And with so many monumental factors at play, it’s tough to pin these results on one thing. New presidential administration? Citywide fires? The Grind to Greatness Realtor Race? In short, we expected a drop in absorption rates in January. But we didn’t expect every neighborhood to drop closer to the buyer’s market for the first time ever. And 7 communities by double-digit percentages!
Absorption Rates – January 2025
- Burbank – 31%
- Encino – 12%
- Glendale – 24%
- Long Beach – 34%
- Los Angeles – 16%
- Northridge – 31%
- Palmdale – 18%
- Pasadena – 25%
- Rancho Cucamonga – 43%
- Reseda – 22%
- Upland – 38%
- Valencia-Santa Clarita – 23%
Absorption Rate FAQs
(1.) What is an absorption rate?
The absorption rate is a statistic frequently used in real estate to gauge whether a housing market favors a buyer or seller. As a general guide, an absorption rate of 15% or lower favors buyers. Absorption rates of 20% or higher favor sellers. But some markets don’t fit neatly into these numbers. Especially in an area with as much market diversity as Southern California.
(2.) Why doesn’t JohnHart factor condos and townhomes into their absorption rates?
Simply put, we feel it’s more accurate to only factor single-family homes into our absorption rates. Why? Because that’s what the vast majority of our clients want.
(3.) How do you calculate an absorption rate for a given neighborhood?
We calculate absorption rates using this universal formula:
The Highest Absorption Rate in a Month of Lows
Despite a 6 percentage point drop, Rancho Cucamonga still took the highest absorption rate of the month by a decent amount. With a 43% absorption rate, Cucamongans who aren’t already living their dreams will want to strongly consider selling now while the wind is at their back. At the other extreme, Encino snagged the lowest absorption rate spot, a strangely competitive honor in January. The Valley community hit a 12% absorption rate which may seem like a staggering low. Yet, Encino previously dropped to a 12% absorption rate in September 2024 (and has gone even lower in the past).
A Major City Gets the Closest It’s Been to the Buyer’s Market
Still, Encino’s no stranger to the buyer’s favor. Even more surprising about the first monthly absorption rates of 2025 is that Encino almost had company in the buyer’s market. The City of Los Angeles itself dropped 9 percentage points down to a 16% absorption rate, just skating to the edge of the buyer’s favor. For those keeping track, yes, this is an all-time low absorption rate for the city. But we’ll get to the new record lows in a moment (there’s a shocking amount of them).
Reseda was the city with the steepest drop in January 2025, plunging a white-knuckle 23% to settle at a 22% absorption rate (also a record low). Just behind Reseda with a drop of 21 percentage points is Burbank, resulting in a 31% absorption rate, its lowest since January 2024 but still firmly in a seller’s market.
The Five (Almost Six!) Areas with Record-Breaking Absorption Rate Lows
In January 2025, we had five neighborhoods either hit new absorption rate lows or tie for their previous record low. These include:
- Glendale (all-time low)
- Los Angeles (all-time low)
- Palmdale (all-time low – tied with November 2022)
- Reseda (all-time low)
- Valencia-Santa Clarita (all-time low)
Even Pasadena almost made the list with its lowest absorption rate since February 2023!
Don’t Get Comfortable
Needless to say, we’d wager that January 2025 was a rare month instead of a trend-setting one. February will likely see those absorption rates surge back up in the seller’s favor. So, if you’re a buyer, take a look at what’s out there while the numbers are in your favor! And if you’re a prospective seller, reach out to one of our agents to get a strategy in place for when the absorption rates go back up next month!
