The summer selling season was winding down in August as kids returned to school and the summer cranked its heat in earnest (a Southern California specialty). That being said, there were no records broken in August like there were in July. But, depending on your neighborhood of interest, there’s still plenty to get excited about as the market prepares for the autumn. Five communities surged higher, six dropped lower, and one stubborn community stayed exactly the same for the fourth month in a row. Well, almost exactly. You’ll see what we mean. But first, the FAQs.
- Burbank – 36%
- Encino – 12%
- Glendale – 38%
- Long Beach – 35%
- Los Angeles – 19%
- Northridge – 27%
- Palmdale – 21%
- Pasadena – 27%
- Rancho Cucamonga – 28%
- Reseda – 28%
- Upland – 31%
- Valencia-Santa Clarita – 27%
Absorption Rate FAQs
What’s an Absorption Rate?
An absorption rate is a statistic that we use in real estate to help us determine whether a market favors the buyer (buyer’s market) or seller (seller’s market). Generally speaking, an absorption rate of 20% or higher indicates a seller’s market, whereas an absorption rate of 15% or below indicates a buyer’s market.
JohnHart Only Factors in Single-Family Homes. Why?
At JohnHart, the overwhelming majority of our clients are looking for single-family homes. To give them the most accurate representation of the market they’re interested in, we don’t factor in our condo and townhouse sales and inventory – only single-family homes.
How Do You Calculate Absorption Rates?
We calculate absorption rates the same way anyone else would – with the use of this universal formula:
Rises With No Surprises
The highest surges of the month came courtesy of two of the usual suspects. Ever-popular Glendale bounded upward by an 8 percentage point increase for a total absorption rate of 38%, the highest of all our neighborhoods in August. Right behind Glendale, with a 7 percentage point leap, was Burbank, securing the second-highest absorption rate of the month with its 36% total. Rarely do the numbers work out this neatly. Neither of these heights is new territory for the coveted neighborhoods, so these seller gains are hardly head-turners.
Where Buyers Should Start with Their Fall Shopping Strategies
August’s steepest drop, though modest, was also not much of a shock. It happened in Encino, a Valley community renowned through these absorption rate analyses for its frequent ventures into the buyer’s market. In August, Encino shed 4 percentage points for the lowest absorption rate at 12%, firmly in the buyer’s favor. Though this isn’t a record, Encino hasn’t been this low since January, so it could be a good place to look for first-time homebuyers using a fall shopping strategy. The community of Valencia/Santa Clarita tied Encino with its own 4 percentage point drop in August, settling into a far more substantial 27% absorption rate overall.
It’s worth noting that the City of Los Angeles is flirting with a seller’s market again. Stumbling just a couple of percentage points to a 19% absorption rate. It’s the second-lowest of the month but far from a low for the city, which was at 16% in January.
Communities That Are Keeping Things Consistent
We’d also like to point out two communities that have held their course for several consecutive months. Palmdale has been steadily dropping since May in tiny increments. Back then, it was at a 27% absorption rate, but in August, it had gradually made its way to 21%. Will it go lower next month? Talk with one of our Palmdale experts to see where the desert community is headed.
Meanwhile, Rancho Cucamonga is bringing stability to a new standard with four consecutive months of the same exact absorption rate. Normally, we round our absorption rates to the nearest whole number, but behind the scenes, we can confirm that Rancho Cucamonga has actually been dropping by fractions of percentage points for the last four months. So, if you’ve had your heart set on RC, it might be time to speak to an agent.
Reading the Signs
Unlike July, there was no hidden portrait of a buyer’s market concealed beneath the surface stats. But there also wasn’t a pendulum swinging back toward the seller’s market. That, on its own, speaks volumes about the direction of the Southern California housing market. We’re forging boldly onward into the autumn doldrums, but it’s been an unusual year overall. Perhaps the autumn won’t be quite as calm as history implies. Join us next month to find out – or, if you can’t wait that long, talk to your agent about where the market is headed!
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.
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