While June’s absorption rate statistics favored surges further into the seller’s market (no shock there), we saw a bit more balance than May’s brutal surge-fest. For one, June’s most aggressive climb was nine percentage points; a far cry from the vicious 15% lunge we saw in Upland in May. Also, while we only witnessed two communities drop closer to a buyer’s market in May, four communities did so in June. While this may seem like a more balanced month, there are a few milestones hidden in June’s numbers. Through persistently climbing numbers, five communities have achieved their highest absorption rates that we’ve measured since we started sharing this data. And all of them are a decent distance away from the heart of Los Angeles.
Absorption Rates – June 2023
- Burbank – 54%
- Encino – 26%
- Glendale – 45%
- Long Beach – 57%
- Los Angeles – 26%
- Northridge – 47%
- Palmdale – 41%
- Pasadena – 38%
- Rancho Cucamonga – 55%
- Reseda – 58%
- Upland – 54%
- Valencia/Santa Clarita – 57%
Absorption Rate FAQS
(1.) What’s an absorption rate?
If you’re just joining us, this likely sounds like a lot of mumbo jumbo. To clarify, absorption rates are a means for us to gauge whether a community’s housing market favors a buyer or a seller. You don’t really need our statistics to figure out that the housing industry in general currently favors the seller dramatically. But, as our numbers illustrate, these statistics fluctuate and we have occasionally watched neighborhoods dip back down into a buyer’s market.
It’s universally accepted that an absorption rate of 15% or lower indicates buyer favorability. Absorption rates of 20% or over tend to favor the seller. But sometimes, as is often the case in the Greater Los Angeles area, these numbers are mere guides. You still need an experienced agent to tell you exactly what they mean for your home buying or selling prospects.
(2.) JohnHart doesn’t account for condos and townhomes in their absorption rate analysis. Why not?
Simply put, we just feel focusing on single family homes creates a more accurate impression of our clients’ interests.
(3.) What formula does JohnHart use to calculate absorption rates?
We use the same formula that everyone else does:
Burbank Dropping It Like It’s Hot
After a dramatic surge of 13 percentage points in May, Burbank dropped back down by 9 percentage points for a still quite high 54% absorption rate. Yeah, that’s nowhere near a buyer’s market. But it should be a more welcome sight for prospective Burbank homeowners than May’s staggering 64% absorption rate. With this plummet, Burbank has handily secured the most dramatic drop of the month.
The Month’s Lowest Absorption Rates Are Still Decently High
Encino stayed the course with no change from last month, but it was still enough to tie for June’s lowest absorption rate. That honor is shared with Los Angeles proper which dropped a single percentage point for its 26% absorption rate.
This isn’t really news for Los Angeles which has hovered around a similar statistic for most of the time we’ve monitored absorption rates. More notably, 26% is actually the high end for absorption rates we’ve witnessed coming from Encino’s market over the year.
The biggest jump in June’s absorption rates was in the valley community of Reseda. Following its leap of nine percentage points (not even close to the most dramatic we’ve seen), Reseda is now boasting a 58% absorption rate. That’s not only the highest absorption rate for all of our communities in June, but it’s a record high for Reseda in general.
Five Neighborhoods Hit Their Highest Absorption Rates to Date
As we mentioned, five neighborhoods hit record high absorption rates for the year with Reseda leading the pack. Reseda is joined by Long Beach and Valencia/Santa Clarita who tied with a 57% absorption rate; just behind the lead. Northridge and Palmdale also measured record high absorption rates. Interestingly, these are neighborhoods well outside the LA city center.
How Hot Will the Summer Get for Sellers and Buyers?
What’s even more interesting is that we’re just two short months away from a full year of absorption rate analysis. We started publicizing our absorption rate data in August 2022. Looking at this month’s numbers, we’ve witnessed a decent sprint into the seller’s market since those days. But a lot can happen in two months! So check out our other absorption rate analysis blogs to see the pattern, and we’ll see you next month with hopefully some better news for buyers!