- calendar_month January 16, 2024
As our absorption rate analysis blogs have likely emphasized by now, statistics are often at the whim of interpretation. These numbers are concrete: they tell us something that actually happened. A certain number of homes were sold in a given area. A certain number of homes were on the market in that same area. Anything beyond that is an assigned meaning that we’ve come to through a mixture of common sense and expertise. December 2023’s absorption rate stats paint the Greater Los Angeles area leaning heavily into the seller’s favor. Sure, a couple of neighborhoods are swimming against the very obvious current. But as you’ll soon see, the bigger picture looks a little different. Maybe things are better for buyers than they seem.
Absorption Rates – December 2023
- Burbank – 45%
- Encino – 23%
- Glendale – 49%
- Long Beach – 48%
- Los Angeles – 28%
- Northridge – 42%
- Palmdale – 31%
- Pasadena – 49%
- Rancho Cucamonga – 50%
- Reseda – 51%
- Upland – 52%
- Valencia/Santa Clarita – 42%
Absorption Rate FAQs
What is an absorption rate in regards to real estate?
An absorption rate is a statistic indicating whether a market favors a prospective homebuyer or home seller. In the U.S., it’s common to see an absorption rate of 20% or higher indicative of a market climate that favors a property’s seller. Absorption rates below 15% are thought to reflect a climate that favors homebuyers. As you’ll see, we’ve found these numbers to be helpful guides but not the final word on a market.
Why does JohnHart Real Estate only factor single family homes into our absorption rates?
Though you can trust JohnHart for condos, townhomes, rentals, and anything in-between, the vast majority of our clients want single family homes. Rather than muddy the waters, we strive to most accurately represent our clients’ most popular interest: the single family home market.
How does JohnHart calculate absorption rates?
We use this universally accepted formula:
Looking Up in Upland
If you’ve been following our absorption rate analysis blogs closely this year, you may have noticed we haven’t seen a surge into the seller’s territory this aggressive since early summer. It’s true that, out of the 12 neighborhoods we publicly assess, 10 of them moved further into the seller’s favor in December. And we’re talking serious moves here. The shortest climbs toward the seller’s favor were 5% bumps in Reseda and Valencia/Santa Clarita. In October, a jump of 5% would be the most dramatic increase of the month. In December, it doesn’t even hold a candle to the steepest jump.
That honor would go to Upland; a city that is no stranger to sudden surges. In December, Upland rocketed 14% further into the seller’s good graces; a move that actually netted it the highest absorption rate of the month at a dizzying 52%. Now, let’s set some context. A 52% absorption rate is high. But it’s not record-breaking ground for Upland. The city has earned higher absorption rates and leapt further up in a single month before December 2023. Just this past June, Upland clocked in with a 54% absorption rate. And that was down from May when Upland held a staggering 60% absorption rate! So, they’ve been here before (and then some).
A Great Time for Pasadena and Burbank Sellers
One neighborhood did hit their personal record high for 2023 in December. Any guesses? It was actually Pasadena, who surged 10 percentage points for their personal 2023 high of 49%. The significance of this milestone may feel lost when outflanked by three other neighborhoods who lean even further into the seller’s favor. But potential sellers of Pasadena: take note! The conditions for a hefty sale haven’t been this good all year.
Photo credit: Junkyardsparkle
Before we move on to December’s meager drops toward the buyer’s favor, this absorption rate analysis would be remiss without a visit to Burbank. Something always seems to be going on in Burbank. In December, they were right at Upland’s heels with the second most violent surge of the month. That 13% rocketing landed Burbank very solidly in the seller’s favor with a 45% absorption rate. Again, not new territory for Burbank, but still worth a mention.
Small Stumbles Are Still Significant
December’s two (yes, only two) drops may not bring much comfort to struggling buyers, but take heart: we’re saving the secret good news until the very end. First, let’s take a look at Rancho Cucamonga. The San Bernardino county-based city had the most dramatic drop of December. Sure, it was just a 3% drop, but it’s something. Rancho Cucamonga sellers shouldn’t start sweating just yet though. The city is still holding the third highest absorption rate of December at a flat 50%.
Sellers looking for December’s lowest absorption rate can trust on reliable Encino. The Valley community didn’t breach a 30% absorption rate all year long. And as the second (of, again, two) drops this month, a slight stumble of just 2 percentage points, Encino closed the year with December’s lowest absorption rate: 23%. Again, this isn’t a record low for Encino. In January, they were calculated at a 10% absorption rate; universally considered the buyer’s favor. Which brings us to that secret good news.
The (Secret) Good News For Hopeful Buyers
Photo credit: Envato
December’s surge-fest isn’t that much of a surprise. After all, the industry typically goes into hibernation around the holidays. This means fewer homes hitting the market, which means less opportunities for sales and, you guessed it, higher absorption rates. In times like this, it pays to look at how the market is holding up by comparing to like conditions. So, we looked back at December 2022 and noticed something that might surprise you.
Down the line, all of the neighborhoods we were surveying at the time had more homes on the market in December 2022 than in December 2023. We know what you’re thinking. “Wasn’t this supposed to be good news for buyers?” But here’s the thing: even with the lower housing inventory in December 2023, JohnHart’s agents managed to sell, on average, more homes in December 2023 than in December 2022.
What’s this mean? That, though statistics are indisputable, they’re open to interpretation. And a seller’s market is no match for the right buyer’s agent. If anything, December 2023 is proof that markets are meant to be overcome. And we love ending the year knowing that we’re doing just that.
So, yeah, December 2023 was a month heavily favoring the seller. And, even with the market in their favor, fewer of them seem to want to part with their homes right now. But the JohnHart agents are still making things happen. So, here’s our question to you to start out 2024: is your dream bigger than the market? If so, one of our agents wants to hear all about it.
RG Realty Group
JohnHart Real Estate
DRE - 01783621
Direct - 818.825.1817, Office - 818.246.1099
