- calendar_month March 6, 2023
- folder Real Estate Market
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Altadena, Burbank, Glendale, La Canada, La Crescenta, Lake Balboa, Los Angeles, Montrose, Rosa Pena Real Estate, Santa Clarita, Valley Village
The absorption rate is an important metric used to measure the flow of the real estate market in certain areas or regions. In particular, the absorption rate in a given area can help indicate the amount of housing inventory sold in a particular month, quarter, or year. We will look at the absorption rate in the context of the Los Angeles real estate market and discuss in detail what it means for buyers, sellers, and agents in Los Angeles.
What is the Absorption Rate?
The absorption rate is defined as the rate at which the housing inventory in an area is being sold, adjusted for new housing supply coming onto the market. This metric can indicate whether the market is “hot” or “cold,” with a higher rate indicating a seller’s market and a lower rate indicating a buyer’s market.
The absorption rate is calculated by taking the number of closed sales in a given month, quarter, or year and dividing it by the total number of available housing units in a given area. This figure is then expressed as a percentage. For example, if there were 500 housing units in a given area and 100 were sold in one month, then the absorption rate for that area would be 20%.
Absorption Rate In Los Angeles
The absorption rate in Los Angeles is an essential metric for buyers, sellers, and agents in understanding the Los Angeles real estate market. The absorption rate in Los Angeles is determined by taking the number of completed sale transactions in a given period and dividing it by the total number of available housing units for sale in the area.
In Los Angeles, the absorption rate is currently around 8.3%. This means 8.3% of the housing inventory was sold over the last month, quarter, or year. The absorption rate in Los Angeles has remained relatively consistent over the last few years, with only slight variations month-to-month.
Analysis of Absorption Rate in Los Angeles
The absorption rate in Los Angeles can be an essential indicator of the current trend in the real estate market in this area. If the absorption rate is low, it can signal that the real estate market is “cooling,” and buyers may have more negotiating power in the market. On the other hand, if the absorption rate is high, it can indicate a "hot market.'
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