Tag Archives: 2017

Orange County Housing Report September 13th, 2017

Orange County Housing Report: Home Supply Slicing Into Sales

The lack of homes for sale in Orange County has hit pending sales activity.

Orange County Housing Report September 13th, 2017

Supply Cuts Pending Sales: The number of pending sales over the past month dropped by 7% due to a supply of homes that are now dropping as well.
Homeowners have been behaving differently ever since the Great Recession began a decade ago. A trend evolved and it has not changed since 2008. That trend is a drought of homeowners opting to sell their homes. In fact, this year it has been even more pronounced.

The number of homes placed on the market this year is the second lowest level this century behind 2012. The lack of homes FOR SALE back then was understandable as home values were only starting to rise and many homeowners were upside down in their homes, owing more than their homes were worth. Flash forward five years later to today and home values have appreciated substantially (the median value of a resale home has increased by more than 60%). Even with the extra equity, homeowners are opting to stay put and are not moving. The trend continues.

This year, there have been 7% fewer homes that have come on the market compared to last year, 2,055 fewer to be exact. For perspective, there have been 18,000 fewer FOR SALE signs this year compared to 2004. This lack of inventory has hurt the true potential for closed sales. With interest rates below 4%, buyers have been chomping at the bit to purchase; yet, they face stiff competition due to a lack of supply.

Today there are 20% fewer choices on the market compared to last year, 5,639 versus 7,040. As a result, the number of pending sales over the prior month (how Reports On Housing gauges demand), dropped in the past couple of weeks by 7%, with 201 fewer pending sales, now totaling 2,624. Today’s demand is 3% off of last year’s 2,719. The lack of supply is truly cutting into the number of pending sales and has undercut demand.

 



True demand, buyers ready, willing and able to buy today, is much higher than the pending sales count is showing simply because of not enough choices. There are insufficient homes FOR SALE in the lower ranges, homes priced below $750,000. This range accounts for 39% of the inventory and 60% of demand. If there were more homes available within this range, the number of pending sales, and ultimately closed sales would skyrocket. This price range is underserved as fewer and fewer homeowners are electing to sell. There are 41% fewer active listings available today below $500,000 compared to last year, and the expected market time (the amount of time it will take a home placed on the market today to open escrow) is a blistering hot 36 days. There are 22% fewer homes available between $500,000 and $750,000, and the expected market time is a hot 46 days. These hot markets are a direct result of a skimpy supply all year long.

There are 25% fewer homes on the market between $750,000 to $1 million, yet the expected market time is at 56 days, not as hot as the lower price ranges. Even though there are fewer choices for buyers, sellers better are priced on the money or they won’t be successful. For homes priced above $1 million, there may be slightly fewer homes on the market compared to last year; however, the expected market time runs from 93 days ($1 million to $1.25 million) to 460 days ($4 million and up). These sellers not only need to be priced precisely on target, they must pack their patience as well.

The bottom line: the Orange County housing market could use more homes on the market, especially in the lower ranges. This lack of inventory has diminished the number of pending and closed sales and has prevented local housing from reaching its full potential.

Active Inventory: The active inventory dropped by 4% over the past couple of weeks.
The active listing inventory shed 223 homes in the past two weeks and now sits at 5,639. It is the lowest level for this time of the year since 2012. The active inventory is falling as expected now that the Autumn Market is here. It will continue to trend down through the remainder of the year, picking up steam after Thanksgiving, the start of the Holiday/Winter Market.

Last year at this time, there were 7,040 homes on the market, 1,401 additional homes or 25% more than today.

Demand:  Demand decreased by 7% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 201 pending sales, or 7%, in the past two-weeks and now totals 2,624. The drop is primarily due to a lack of available choices in the lower ranges below $750,000. For homes priced above $750,000, with the only exception being homes between $1.5 million to $2 million, demand is actually up year over year. There have also been slightly more homes placed on the market year over year for these higher price ranges.

Last year at this time, demand was at 2,719 pending sales, 95 more than today.

Luxury End:  Luxury demand plunged by 7% in the past couple of weeks and the inventory dropped by 1%.
In the past two weeks, demand for homes above $1.25 million decreased from 385 to 358 pending sales, a 7% drop. The luxury home inventory decreased from 2,002 homes to 1,979, a 1% drop. As a result, the expected market time for all homes priced above $1.25 million increased from 156 days to 166 days. The luxury inventory and demand will continue to drop through the end of the year

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 98 to 90 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 134 to 171 days. For homes priced between $2 million and $4 million, the expected market time increased from 185 days to 198 days. In addition, for homes priced above $4 million, the expected market time decreased from 462 to 460 days. At 460 days, a seller would be looking at placing their home into escrow around the mid-December 2018.

Orange County Housing Market Summary:

  • The active listing inventory decreased by 223 homes in the past couple of weeks and now totals 5,639. The trend is down for the remainder of the year. Last year, there were 7,040 homes on the market, 1,401 more than today.
  • There are 41% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 21%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
  • Demand, the number of pending sales over the prior month, decreased by 201 homes in the past couple of weeks, down 7%, and now totals 2,624. The average pending price is $860,101.
  • The average list price for all of Orange County increased from $1.6 million to $1.7 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 42 days. This range represents 39% of the active inventory and 60% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 56 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 20% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 93 days, a balanced market that does not favor a buyer or seller.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 98 days to 93. For homes priced between $1.5 million and $2 million, the expected market time increased substantially from 134 to 171 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 185 days to 198 days. For luxury homes priced above $4 million, the expected market time decreased from 462 to 460 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.
  • The expected market time for all homes in Orange County increased in the past couple of weeks from 61 days to 62 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise as housing makes its way through the Autumn Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 2.4% of demand. There are only 33 foreclosures and 54 short sales available to purchase today in all of Orange County, that’s 87 total distressed homes on the active market, increasing by 5 in the past two weeks. Last year there were 125 total distressed sales, 44% more than today.
  • There were 3,110 closed sales in August, a 12% increase over July 2017 and a 1.3% increase over August 2016. The sales to list price ratio was 98.1% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.7%. That means that 98.5% of all sales were good ol’ fashioned equity sellers.

 

 

 

 

 

 

 

 

 

Orange County Housing Report August 29th, 2017

Orange County Housing Report: A Blazing Hot Autumn

With an extremely low inventory and blistering demand, the Autumn Market is poised to be the hottest in years.

Orange County Housing Report August 29th, 2017

A Hot Autumn: With 19% fewer FOR SALE signs this year compared to last, the Autumn Market is going to be hot.

It is that time of the year. Have you seen all of the signs? The leaves are starting to fall, the kids are back in school, and Costco already has Halloween costumes. That is right, autumn is here. The official start to autumn is not until Friday, September 22, but all of the signs are here.

As for Orange County housing, the Autumn Market typically starts around the end of August when the kids head back to their classrooms. It’s no longer the “prime” season for real estate. Both the Spring and Summer Markets are in the past. Housing will now shift gears and transition to a slower time of the year. This year will not be an exception, demand will fall, sales will fall, and the expected market time will start to rise. Nevertheless, this year will be the hottest Autumn Market since 2005.

Today, there are 19% fewer FOR SALE signs on the active listing inventory right now compared to last year at this time. In fact, the last time the supply of homes was this low at the end of August dates back to 2012 when the active inventory was dropping like a rock. And, in spite of this year being the second fewest number of homeowners opting to place their homes on the market this century (2012 was the lowest), demand has remained strong. Demand, the number of new pending sales over the prior month, is still at end of March levels. As a result, the current expected market time is at levels not seen since 2013.

The expected market time takes into account both supply and demand. It is the amount of time a seller can expect to be on the market before opening up escrow. It is the velocity of the market as a whole. Todays expected market time is 62 days, 19% lower than last year’s 77 days. At 62 days, all of Orange County it is a seller’s market. It is no longer a HOT seller’s market, below 60 days, as it was from the end of January to the middle of June of this year, but it is still hotter than July’s 63 day expected market time.

Everything priced below the $1 million mark, is flying off the shelves. The expected market time for homes priced below $500,000 is 34 days. Now that is hot! Above $1 million is a bit of different story, the higher the price, the slower the market. For homes priced above $4 million, the expected market time rises to 462 days.

From here, we can expect the active listing inventory to continue to fall throughout the remainder of 2017. Demand, in terms of new pending sales, will slowly but surely drop throughout the Autumn Market. It will then drop like a rock from Thanksgiving through the end of the year. With both the inventory and demand dropping, the expected market time will only rise slightly for the remainder of the year.

A warning for sellers: do not stretch the asking price much at all. Word from the real estate trenches indicates that many homeowners in the lower ranges are sitting on the market with very little activity and no offers to purchase because of price. In spite of the hotter real estate market, buyers are not willing to overpay for a property. As a seller, if you have been on the market for a while and the number of buyer showings has dropped considerably, the market is speaking to you. It is most likely the price. Homes that are priced well, taking into consideration condition, upgrades, and location, will attract offers to purchase.

A warning for buyers: do not expect the market dynamics to change much in the coming months. Even with a drop in buyer demand during the autumn and Holiday Markets, meaning less buyer competition, there will also be a drop in the number of homeowners placing their homes on the market. Many homeowners will opt to pull their homes off of the market now that both the Spring and Summer Markets are in the rearview mirror. Ultimately, there will be fewer choices. With a drop in both supply and demand at the same time, the expected market time will not fluctuate much.

Active Inventory: The active inventory dropped only slightly during the past couple of weeks.

The active listing inventory shed 15 homes in the past two weeks and now sits at 5,862. Fifteen homes may not be a lot, but it illustrates the direction that the active listing inventory will be heading for the remainder of the year: DOWN. It is the second lowest level this century, trailing only 2012. Typically, the inventory peaks around mid-August, but this year it peaked in mid-July.

Last year at this time, there were 7,267 homes on the market, 1,405 additional homes or 24% more than today.

Demand:  Demand decreased by 2% in the past couple of weeks.

Demand, the number of homes placed into escrow within the prior month, decreased by 65 pending sales, or 2%, in the past two-weeks and now totals 2,825. Demand is off the most in the lower end, homes priced below $750,000. Today, there are 39% fewer homes available below $500,000 compared last year at this time and demand is off by 20%. Obviously, there is plenty of pent up demand and this data point would be through the roof if there were more homes available. Demand is off by 7% for homes priced between $500,000 and $750,000 with 20% fewer homes on the market. Above $750,000, demand is stronger this year compared to last year despite fewer homes on the market.

Last year at this time, demand was at 2,843 pending sales, 18 more than today.

Luxury End:  Luxury demand increased by 4% in the past couple of weeks and the inventory dropped by 3%.

In the past two weeks, demand for homes above $1.25 million increased from 369 to 385 pending sales, a 4% increase. The luxury home inventory decreased from 2,072 homes to 2,002, a 3% drop. As a result, the expected market time for all homes priced above $1.25 million dropped from 168 days to 156 days. The luxury inventory will continue to drop through the end of the year. Similarly, luxury demand will drop significantly through the end of the year, but it will bounce around a bit, typically increasing slightly in October.

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 110 to 98 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 130 to 134 days. For homes priced between $2 million and $4 million, the expected market time decreased from 224 days to 185 days. In addition, for homes priced above $4 million, the expected market time decreased from 480 to 462 days. At 468 days, a seller would be looking at placing their home into escrow around the start of December 2018.

Orange County Housing Market Summary:

  • The active listing inventory decreased by 15 homes in the past couple of weeks, and now totals 5,862. The trend is down for the remainder of the year. Last year, there were 7,267 homes on the market, 1,405 more than today.
  • There are 39% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 20%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
  • Demand, the number of pending sales over the prior month, decreased by 65 homes in the past couple of weeks, down 2%, and now totals 2,825. The average pending price is $866,086.
  • The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 40 days. This range represents 40% of the active inventory and 60% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 57 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 19% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 78 days, a tepid seller’s market with very little appreciation.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 110 days to 98. For homes priced between $1.5 million and $2 million, the expected market time increased from 130 to 134 days. For luxury homes priced between $2 million and $4 million, the expected market time dropped from 224 days to 185 days. For luxury homes priced above $4 million, the expected market time decreased from 480 to 462 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.
  • The expected market time for all homes in Orange County increased in the past couple of weeks from 61 days to 62 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise as housing makes its way through the Autumn Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.4% of all listings and 2.7% of demand. There are only 30 foreclosures and 52 short sales available to purchase today in all of Orange County, that’s 82 total distressed homes on the active market, dropping by 6 in the past two weeks. Last year there were 136 total distressed sales, 66% more than today.
  • There were 2,768 closed sales in July, a 14% drop over June 2017 and a 1.9% decrease over July 2016. The sales to list price ratio was 98.2% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.8%. That means that 98.4% of all sales were good ol’ fashioned equity sellers.

 

 

 

 

 

 

 

 

 

Orange County Housing Report August 15th, 2017

Orange County Housing Report: An Early 2017 Peak

A low inventory peak means a hot seller’s market for quite some time.

Orange County Housing Report August 15th, 2017

Active Inventory Peak: the active inventory has been low for years, but this year it has been exceptionally low.

The Orange County housing market has been frustrating buyers for years now and 2017 has proved to be especially frustrating. With 7% fewer FOR SALE signs this year compared to last year, there just have not been enough homes to satiate the voracious appetite of buyers.

As a result of low inventory and off-the-chart demand, Orange County homes have appreciated non-stop since 2012. In the past year alone (July ’17 over July ’16), the median sales price has risen by 5.5%, and since 2012 has risen by 80%. Even with a rising median sales price, the historically low interest rate environment is keeping homes affordable. And, interest rates are projected to remain low for the rest of the year and into 2018 as well.

An anemic inventory is only going to fuel future appreciation. Buyers will continue to compete with limited choices and multiple offers will persist, especially in the lower ranges, homes priced below $750,000. The inventory will remain low for quite some time because the active listing inventory peaked about a month ago, not quite reaching the 6,000 home mark. For perspective, the active inventory needs to remain above 8,000 homes for quite some time in order for the housing market to move from a seller’s market to a balanced market, one that does not favor a buyer or seller.

In the past couple of weeks, the active inventory shed 90 homes and now totals 5,877. The peak occurred a month ago at 5,983 homes. Last year’s peak was at 7,329 homes, 22% higher, or 1,346 more FOR SALE signs than this year. There are significantly fewer homes on the market throughout Orange County. The difference is substantial in certain areas of the county. For example, in Aliso Viejo there are 40% fewer homes on the market today compared to 2016 at this time. There are 79 available homes compared to 131. It was challenging finding a home last year, but this year has been significantly worse. With the exception of four areas, Corona del Mar, Cypress, Dana Point, and Portola Hills, there simply are not enough homes on the market compared to a year ago today.

Orange County Housing Report August 15th, 2017

This year’s peak is the lowest peak since Reports On Housing started tracking the local housing market back in 2004. Keeping that in mind, where will the Orange County housing market go from here? First, the active inventory will continue to drop though the end of the year, picking up steam in September. By that point, housing will have moved onto the Autumn Market when fewer homeowners will opt to place their homes on the market with the best time of the year to sell, the Spring and Summer Markets, officially in the rearview mirror.

With such a low peak, the expected seasonal drop in the inventory from now until New Year’s will result in a very anemic start to 2018. It may dip to the record lows of 2013, when there were only 3,161 homes to start the year. Quite simply, there were not enough homes to keep up with the strong demand and bidding wars escalated during the spring. That could be the case this coming year in spite of high prices. Additionally, the low interest rate environment will help fuel another crazy start to the Orange County housing market.

Demand:  Demand increased by 2% in the past couple of weeks.

Demand, the number of homes placed into escrow within the prior month, increased by 55 pending sales, or 2%, in the past two-weeks and now totals 2,890. Demand is either near the same or considerably higher in every price range except for properties priced below $500,000. With 41% fewer homes available below $500,000 compared to this time last year, it is no wonder that demand is off by 20% year over year in this range.

Last year at this time, demand was at 2,935 pending sales, 45 more than today. The expected market time was at 75 days. The current expected market time dropped from 63 days two weeks ago to 61 today. At 61 days, the market is not quite a HOT seller’s market, but a tepid seller’s market with muted appreciation (60 to 90 days).

Orange County Housing Report August 15th, 2017

Luxury End:  Luxury demand dropped by 1% in the past couple of weeks and the inventory increased by only 7 homes.

In the past two weeks, demand for homes above $1.25 million decreased from 373 to 369 pending sales, a 1% drop, the. The luxury home inventory increased from 2,065 homes to 2,072, nearly the same. The luxury end is not evolving that much right now.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 101 to 110 days. For homes priced between $1.5 million to $2 million, the expected market time dropped from 135 to 130 days. In addition, for homes priced above $2 million, the expected market time decreased from 280 days to 278 days. At 278 days, a seller would be looking at placing their home into escrow around mid-May of next year.

Orange County Housing Report August 15th, 2017

 

Orange County Housing Market Summary:

  • The active listing inventory decreased by 90 homes in the past couple of weeks, and now totals 5,877, a 2% drop. It officially reached a peak a month ago and is now slowly dropping. The inventory never reached 6,000 homes this year. Last year, there were 7,295 homes on the market, 1,418 more than today.
  • There are 41% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 20%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
  • Demand, the number of pending sales over the prior month, increased by 55 homes in the past couple of weeks, and now totals 2,890. The average pending price is $844,699.
  • The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 39 days. This range represents 39% of the active inventory and 62% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 56 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 19% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 81, a tepid seller’s market with very little appreciation.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 101 days to 110. For homes priced between $1.5 million to $2 million, the expected market time decreased from 135 to 130 days. For luxury homes priced above $2 million, the expected market time decreased from 280 to 278 days.
  • The luxury end, all homes above $1.25 million, accounts for 36% of the inventory and only 13% of demand.
  • The expected market time for all homes in Orange County dropped in the past couple of weeks from 63 days to 61 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise as housing transitions into the Autumn Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 2.3% of demand. There are only 31 foreclosures and 57 short sales available to purchase today in all of Orange County, that’s 88 total distressed homes on the active market, identical to two weeks ago. Last year there were 130 total distressed sales, 47% more than today.
  • There were 2,766 closed sales in July, a 14% drop over June 2017 and a 1.9% decrease over July 2016. The sales to list price ratio was 98.2% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.8%. That means that 98.4% of all sales were good ol’ fashioned equity sellers.

 

Orange County Housing Report August 15th, 2017

 

Orange County Housing Report August 15th, 2017

 

 

Orange County Housing Report August 15th, 2017

 

 

Orange County Housing Report August 15th, 2017

 

 

Orange County Housing Report August 15th, 2017

Orange County Housing Report August 4th, 2017

Orange County Housing Report: A Mid-Year Checkup

Buyers and sellers often rely on the price per square foot as a way to determine the value of a home, but it is just not accurate.

Orange County Housing Report August 4th, 2017

Price Per Square Foot: Do not rely on the price per square foot as a reliable method to determine a home’s value.
Everybody is looking for a shortcut in establishing the value of a home. Online home valuation tools are now everywhere, Zillow being the most popular. They simply are not accurate. If you can find the fine print and have a math degree to determine what in the world they are saying, these tools are merely approximations of value and frequently have significant errors. If going online and plugging in an address does not work, what about utilizing the price per square foot to secure the value of a home? Unfortunately, it too is just another unreliable shortcut.

The average price per square foot varies from city to city, neighborhood to neighborhood, street to street, and even home to home. For all of Orange County, the price per square foot in June was $440. In May, it was $459. No, there was not a 4% drop in value from May to June. Instead, it illustrates that this data point cannot be relied upon to determine the value of a home. Just as the median sales price is a poor indicator of the precise increase or decrease in value, the price per square foot is unquestionably as unreliable.

Orange County Housing Report August 4th, 2017

Applying the average price per square foot to different sized homes to determine the value results in a major error in comparing it to the true average sales price. In Orange County, a 3,000 square foot home comes close but is still $29,000 off, a 2% error. In breaking it down by the city, the severity of the errors is similar. In Mission Viejo, for example, there is quite a discrepancy in both the low end and the higher end. In Newport Beach, prices vary considerably for smaller sized homes.

Overall, the price per square foot should not be used to isolate the true value of a home. It can be used, over time, as a gauge to determine which direction home values are moving. Some months it is up, and other months it is down. Yet, over the course of a year, the values will start to paint a picture that illustrates the direction of the market.

So, why can’t the price per square foot be used to zero in on the value of a home? There are way too many nuances that go into the Fair Market Value of a home. The number of bedrooms and bathrooms, lot size, usable lot, square footage, location, pool, spa, upgrades, amenities, condition, main floor bedroom, number of stories, school zone, privacy, architecture, floor plan design, view, garages, street parking, proximity to the beach, and so on, all determine a home’s value. Does the home back to a busy street? Is it located on a cul-de-sac that has homes on only one side of the street? Is there street noise? The list of questions goes on and on.

Square footage alone cannot determine if a home has been updated, upgraded, or is in turnkey condition. For example, four of the exact same Madrid Del Lago single level plans sold in Mission Viejo over the past 90-days, all 2,133 square feet. The sold prices varied from $838,000 ($392 per square foot) to $997,500 ($468 per square foot), a $159,500 difference. Quite obviously, square footage alone does not provide enough information to arrive at the price of a home.

Professional REALTORS® and appraisers take a home and compare it to similar pending and recently sold homes, adjusting the value up and down based upon all of the differences. The price per square foot is not really a factor. There are no shortcuts. The market analysis that professionals prepare is by far the most accurate method for determining the value of a home.

Active Inventory: The active inventory may have already peaked after declining by 16 homes in the past couple of weeks.
The active listing inventory shed 16 homes and now sits at 5,967, the first drop since the end of January. Sixteen homes may not be a lot, but it illustrates how the active inventory is having a real hard time pushing past the 6,000 home mark. And, it looks as if that is not going to occur at all this year. Typically, the inventory peaks around mid-August, but not this year. The theme for 2017 has been fewer homeowners listing their homes for sale. There have been 10% fewer homes to come on the market over the past month, and 7% fewer overall this year. As a result, it looks as if the Orange County active inventory may have already peaked, a bit early.

Last year at this time, there were 7,317 homes on the market, 1,350 additional homes or 23% more than today.

Orange County Housing Report August 4th, 2017

Demand:  Demand increased by 5 pending sales in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, increased by 5 pending sales in the past two-weeks and now totals 2,835, nearly the same. Demand is up year over year in every price range except the entry-level market, homes priced below $500,000. With 39% fewer homes available below $500,000 compared to this time last year, predictably, demand is off by 19% year over year.

Last year at this time, there were 31 additional pending sales, totaling 2,866. The current expected market time remained the same over the past couple of weeks at 63 days, a much hotter market than last year’s 77 days. At 63 days, the market is no longer a HOT seller’s market, but a tepid seller’s market with muted appreciation.

Luxury End:  Luxury demand increased by 13% in the past couple of weeks and the inventory fell by 1%.
In the past two weeks, demand for homes above $1.25 million increased from 329 to 373 pending sales, a 13% rise, the highest level since mid-May. The luxury home inventory decreased from 2,089 homes to 2,065, down 1%.  This surge has been isolated to homes between $1.25 million and $2 million.

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 123 to 101 days. For homes priced between $1.5 million to $2 million, the expected market time dropped from 176 to 135 days. In addition, for homes priced above $2 million, the expected market time increased from 269 days to 280 days. At 269 days, a seller would be looking at placing their home into escrow around the beginning of May of next year.

Orange County Housing Report August 4th, 2017

Orange County Housing Market Summary:

  • The active listing inventory decreased by 16 homes in the past couple of weeks and now totals 5,967, nearly the same. The inventory is having a real issue reaching 6,000 homes this year and may have already peaked a couple of weeks ago. Last year, there were 7,317 homes on the market, 1,350 more than today.
  • There are 39% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 19%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
  • Demand, the number of pending sales over the prior month, increased by five homes in the past couple of weeks, and now totals 2,835. The average pending price is $842,718.
  • The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 40 days. This range represents 39% of the active inventory and 62% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 59 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 19% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is at 94 days, a balanced market that does not favor a buyer or seller.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 123 to 101 days. For homes priced between $1.5 million to $2 million, the expected market time decreased from 176 to 135 days. For luxury homes priced above $2 million, the expected market time increased from 269 to 280 days.
  • The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 13% of demand.
  • The expected market time for all homes in Orange County remained the same over the past couple of weeks at 63 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 2% of demand. There are only 32 foreclosures and 58 short sales available to purchase today in all of Orange County, that’s 88 total distressed homes on the active market, one more than two weeks ago. Last year there were 136 total distressed sales, 54% more than today.
  • There were 3,229 closed sales in June, a 3% increase over May 2017 and a 3% increase over June 2016. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures accounted for just 0.99% of all closed sales and short sales accounted for 0.87%. That means that 98% of all sales were good ol’ fashioned equity sellers.

Orange County Housing Report August 4th, 2017

 

Orange County Housing Report August 4th, 2017

 

Orange County Housing Report August 4th, 2017

 

Orange County Housing Report August 4th, 2017

 

Orange County Housing Report August 4th, 2017

Orange County Housing Report for July 19th, 2017

Orange County Housing Report July 19th, 2017

Orange County Housing Report: A Mid-Year Checkup

With half of 2017 in the rearview mirror, it is helpful to take a look at where housing has been, where it is now, and where it is heading.

Orange County Housing Report July 19th, 2017

Housing Checkup: Every once in a while, it is helpful to take a step back and evaluate the overall health of the current housing market and the latest trends.

The Orange County housing market has been hot for a very long time. It is working on its sixth year of continuous appreciation. Home values have surpassed record heights reached in June of 2007. There have not been enough homes on the market, buyers continue to trip over each other in pursuit of their piece of the American Dream, and multiple offers are the norm. That adequately describes the first half of 2017, so where do we go from here? Will it be more of the same or will the market evolve?

Let’s take a step back from the relentless real estate market for a moment. With a stethoscope, thermometer, and blood pressure cuff in hand, here are the latest trends and current heartbeat of the Orange County housing market:

  • 2017 has been the year of the extremely lean active inventory. The year started with only 4,071 homes on the market, the lowest level since 2013. Since then, the active inventory has grown, but at a much slower pace than normal. It has been slim pickings. There have been 6% fewer homes placed on the market so far this year compared to 2016. In the past month alone, 11% fewer homes have entered the fray, resulting in an active inventory that only grew by 78 homes. It seems as if the housing market has already peaked, yet the inventory has not quite reached the 6,000 home mark. The inventory needs to be at 8,000 homes for it to move away from a seller’s market to one that is balanced, not favoring a buyer or seller; but that is not going to happen anytime soon. Today’s inventory is 18% lower than last year. It will remain at about 6,000 homes through the rest of the Summer Market and then will start to fall during the Autumn Market as unsuccessful homeowners throw in the towel, realizing that both the Spring and Summer Markets will be in the past.
  • Demand has been hot this year but has been muted a bit due to a lack of inventory. With fewer homes coming on the market this year, demand has not reached its full potential. In spite of that, it has reached levels similar to last year, surpassing 2016 for the first couple of months. From there, it has fallen slightly short of last year’s levels. The latest reading has demand surpassing 2016 slightly. From here, demand will slowly drop as summer progresses. It will continue its descent throughout the Autumn Market and will reach the lowest levels of the year during the Holiday Market, Thanksgiving through January 2018. With demand slowing a bit due to all of the summer distractions, carefully pricing is fundamental in order for sellers to find success. That will hold true for the remainder of the year.
  • The expected market time is on the rise, but the overall market is a lot hotter than last few years. Supply (the inventory) and demand (recent pending sales) determines the expected market time. That is the amount of time it will take for a newly listed home to be placed into escrow. When it drops below 2 months, it is a HOT seller’s market. From February through the mid-June, the market was HOT, two months longer than last year. Since then, the market has exceeded 60 days, indicating a tepid seller’s market. In a tepid seller’s market, carefully pricing is essential and appreciation slows. Sellers were getting away with stretching the asking price and home values were appreciating swiftly. With the Summer Market rolling along, the pace has slowed a bit. For all of Orange County, it has risen from 51 days in the heart of the Spring Market to 63 days today. All price ranges are slowing, but it is still HOT below $750,000. It is important to note that the higher the price, the longer it takes to find success. The market will continue to slow throughout the summer. As the market downshifts, buyers move away from a willingness to pay any price to obtain a home, to a strong desire to pay the Fair Market Value for a home, a value determined by the most recent pending and closed sales. It will remain a tepid seller’s market for the remainder of 2017.
  • Closed sales are slightly higher than last year and it looks as if that will not change for the remainder of the year. Through the first half of the year, there have been 15,658 closed sales compared to 15,219 last year, 3% more. With slightly higher demand for the remainder of the year, closed sales will remain a bit higher than last year.
  • Luxury home sales have surpassed last year’s record pace, but there is still a lot of seller competition to overcome in order to find success. The luxury market is best defined as the top 10% of closed sales, or $1,250,000 and higher. For the first six months, there have been 1,864 closed luxury sales compared to 1,532 last year, 22% more. That is a record number of luxury sales in Orange County. However, as of today there are 2,089 active listings above $1,250,000, more than have sold in the first half of this year. Today, the expected market time for luxury homes is 190 days. For proper perspective, that would mean that escrow would open up at the end of January of next year. Keep in mind, the expected market time is even longer in the higher price ranges. For homes priced above $2 million, the expected market time is 269 days, opening escrow in April 2018.
  • In spite of the Federal Reserve raising the short-term rate, interest rates have slowly inched their way back below 4%. The Federal Reserve has been talking a big game for a few years now about raising the short-term rate. After years of bluffing, they have backed up all of the talk and have raised rates three times, including the one last December. Yet, rates have not been behaving at all like expected by economic experts or prognosticators. After the presidential elections in November, interest rates climbed significantly at the prospect of inflation and reached 4.375% by the end of 2016. However, with the realization that the new presidential administration’s inflationary policies may take years to implement, long-term interest rates have floated back down to below 4%, reaching 3.91% in June. As international economic uncertainty continues, everybody is seemingly “parking their money” in US Treasuries as a “safe haven,” ultimately ensuring that the low-interest rate environment continues. Interest rates will not change much for the remainder of the year and they will continue to stoke the flames of demand.

 

Active Inventory: The active inventory increased by only 47 homes in the past couple of weeks.

The active listing inventory added an additional 47 homes in the past two weeks, a 1% increase, and now sits at 5,983, poised to surpass the 6,000 home mark. The inventory is only slowly growing and it looks as if this year’s peak will be right around that 6,000 home mark. Quite simply, not enough homes are coming on the market as more and more homeowners are opting to stay put.

Last year at this time, there were 7,329 homes on the market, 1,346 additional homes or 22% more than today.

 

Orange County Housing Report for July 19th, 2017

Demand:  Demand decreased by 2% in the past couple of weeks.

Demand, the number of homes placed into escrow within the prior month, decreased by 55 pending sales in the past two-weeks and now totals 2,830, a 2% decline. Demand is off the most in the entry-level market, homes priced below $500,000. With 38% fewer homes available below $500,000 compared to this time last year, it is no wonder that demand is off by 18% year over year.

Last year at this time, there were 47 fewer pending sales, totaling 2,783. The current expected market time increased from 62 to 63 days in the past couple of weeks, a much hotter market than last year’s 79 days. At 63 days, the market is no longer a HOT seller’s market, but a tepid seller’s market with muted appreciation.
Orange County Housing Report for July 19th, 2017
Luxury End:  Luxury demand decreased by 4% in the past couple of weeks while the inventory grew by 1%.

In the past two weeks, demand for homes above $1.25 million decreased from 344 to 329 pending sales, a 4% decline. The luxury home inventory increased from 2,068 homes to 2,089, up 1%.  The luxury market downshift is due to summer distractions. The supply is up and demand is down.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 120 to 123 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 155 to 176 days. In addition, for homes priced above $2 million, the expected market time increased from 266 days to 269 days. At 269 days, a seller would be looking at placing their home into escrow around the beginning of April of next year.

Orange County Housing Report for July 19th, 2017


Orange County Housing Market Summary:

  • The active listing inventory increased by just 47 homes, or 1%, in the past couple of weeks, and now totals 5,983, knocking on the door of the 6,000 home level. Last year, there were 7,329 homes on the market, 1,346 more than today.
  • There are 38% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 18%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
  • Demand, the number of pending sales over the prior month, decreased by 2% in the past couple of weeks, dropping by 55 pending sales and now totals 2,830. The average pending price is $829,260.
  • The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 39 days. This range represents 39% of the active inventory and 63% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 57 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 20% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is at 93 days, a balanced market that does not favor a buyer or seller.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 120 to 123 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 155 to 176 days. For luxury homes priced above $2 million, the expected market time increased from 266 to 269 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 11% of demand.
  • The expected market time for all homes in Orange County increased from 62 days to 63 in the past couple of weeks, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 1.8% of demand. There are only 36 foreclosures and 51 short sales available to purchase today in all of Orange County, that’s 87 total distressed homes on the active market, 11 more than two weeks ago. Last year there were 128 total distressed sales, 47% more than today.
  • There were 3,229 closed sales in June, a 3% increase over May 2017 and a 3% increase over June 2016. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures accounted for just 0.99% of all closed sales and short sales accounted for 0.87%. That means that 98% of all sales were good ol’ fashioned equity sellers.

 

Orange County Housing Report for July 19th, 2017

 

Orange County Housing Report for July 19th, 2017

 

Orange County Housing Report for July 19th, 2017

 

Orange County Housing Report for July 19th, 2017

 

Orange County Housing Report for July 19th, 2017

Orange County Housing Report July 5th, 2017

Orange County Housing Report: Waiting on Change

Many would be buyers are holding off on purchasing and waiting for the market to change.

Orange County Housing Report July 5th 2017

When Will the Market Change: The Orange County housing market has reached record heights and has been appreciating for over five years now.

The Orange County Housing Market has been going up non-stop for over five years now. It has been like the initial chain lift hill on one of the many roller coasters at Knott’s Berry Farm. Clickety clack, clickety clack, clickety clack… it seems as if the housing roller coaster could go up forever. Yet, many buyers believe that roller coaster ascent has to reach a peak soon.

Housing does not go up forever. There are peaks and there are troughs. There are times when buyers are in control, and there are times when sellers are in control. The skeptical buyers who are waiting for an end to this madness find many reasons for a housing downturn on the horizon. They point to record prices. They recall mid-2007 when the housing market began to unravel; however, prior to it unraveling, almost everybody felt like the market would increase forever. Very few economists and prognosticators forecasted a crippling housing downturn.

It is completely understandable where these buyers are coming from. They are right. The market will eventually reverse course and depreciate. The questions boil down to “when?” The answer is simply, “not anytime soon.”

To better understand why the market is poised to continue to accelerate forward, it is best to dust off that old Econ 101 book that details supply and demand. When there is too much supply and demand is low, it favors the buyer. When there is not enough supply and demand is high, it favors the seller. With years of a lack of supply of homes and red-hot demand, it is no wonder that it has been a hot seller’s market for quite some time now.

Orange County Housing Report July 5th 2017

Orange County Active Listing Inventory Year Over Year

Currently, there are 5,936 homes on the market, the lowest level for this time of the year since 2013. Back then there were 4,732 homes on the market and it was even more difficult for buyers to secure a home than it is today. For housing to move away from a seller’s market towards a balanced market, one that does not favor a buyer or seller, there needs to be at least 8,000 homes on the market for a sustainable amount of time. The more homes on the market, the higher the supply of homes. With more supply often comes softer demand. Only then could housing finally shift towards a buyer’s market.

That is the issue. Supply needs to increase and demand to soften. For proper perspective, at the end of June 2007, there were 17,250 homes on the market and the expected market time was over 9-months (that is the amount of time a home is on the market prior to being placed into escrow). Demand (the last month of pending sales) was at 1,894 back then compared to 2,885 today. The current expected market time is 62 days, quite a bit different than a decade ago.

The trend of a lack of inventory and red hot demand stoked by ultra low-interest rates does not look like it will change course anytime soon. Multiple offers are the norm. This holds true for just about any property priced below $1.25 million that is in great condition, nicely appointed, in a good location, and priced right, close to its Fair Market Value. And, in the lower price ranges, buyers are tripping over each other to secure their piece of the American Dream.

For buyers waiting on the market to change, they are in store for a long wait.

Active Inventory: The active inventory increased by only 31 homes in the past couple of weeks.

The active listing inventory added an additional 31 homes in the past two weeks, a 1% increase, and now sits at 5,936. The biggest issue for Orange County housing this year has been a real lack of inventory. Thus far this year, there have been 6% fewer homes placed on the market. In the past month alone, there have been 10% fewer homes placed on the market. This issue has prevented additional closed sales and has undermined the performance of housing this year.

We can expect the inventory to continue to rise throughout the Summer Market until it reaches a peak somewhere around mid-August. From there, the market will transition into the Autumn Market, from mid-August through Thanksgiving, with fewer homes coming on the market with both the spring and summer in the rearview mirror.

Last year at this time, there were 7,104 homes on the market, 20% more than today.

 

Orange County Housing Report July 5th 2017

Orange County Demand Year Over Year


Demand
:  Demand decreased by 2% in the past couple of weeks.

The number of homes placed into escrow within the prior month, decreased by 52 pending sales in the past two weeks and now totals 2,885, a 2% decline. Demand is off the most in the entry-level market, homes priced below $500,000. With 22% fewer homes that have been placed on the market so far this year below $500,000, demand is now off by 17%. This market has been underperforming all year due to a real lack of inventory.

We can expect demand to drop slightly from now through the end of the summer.

Last year at this time, there were 2 more pending sales totaling 2,887, almost identical. The expected market time increased from 60 to 62 days in the past couple of weeks. At 62 days, the market is no longer a HOT seller’s market, but a tepid seller’s market with muted appreciation.  Last year it was at 74 days.


Luxury End
Luxury demand decreased by 7% in the past couple of weeks while the inventory grew by 3%.

In the past two weeks, demand for homes above $1.25 million decreased from 371 to 344 pending sales, a 7% decline. The luxury home inventory increased from 2,011 homes to 2,068, up 3%.  The luxury market downshifted with the beginning of the Summer Market. The supply is up and demand is down.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 96 to 120 days. Homes priced between $1.5 million to $2 million, the expected market time increased from 148 to 155 days. In addition, for homes priced above $2 million, the expected market time increased from 253 days to 266 days. At 266 days, a seller would be looking at placing their home into escrow around the end of March of next year.

Orange County Housing Report July 5th 2017

 

Orange County Housing Market Summary:

  • The active listing inventory increased by just 31 homes, or 1%, in the past couple of weeks, and now totals 5,936, knocking on the door of the 6,000 home level. Last year, there were 7,104 homes on the market, 1,168 more than today.
  • There are 39% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 17%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
  • Demand, the number of pending sales over the prior month, decreased by 2% in the past couple of weeks, declining 52 pending sales and now totals 2,885. The average pending price is $830,508.
  • The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 38 days. This range represents 39% of the active inventory and 62% of demand.
  • Homes priced between $750,000 and $1 million, the expected market time is 59 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 19% of demand.
  • Houses priced between $1 million to $1.25 million, the expected market time is at 79 days, a tepid seller’s market.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 96 to 120 days. Homes priced between $1.5 million to $2 million, the expected market time increased from 148 to 155 days. Luxury homes priced above $2 million, the expected market time increased from 253 to 266 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 12% of demand.
  • The expected market time for all homes in Orange County increased from 60 days to 62 in the past couple of weeks, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.3% of all listings and 2.2% of demand. There are only 27 foreclosures and 49 short sales available to purchase today in all of Orange County, that’s 76 total distressed homes on the active market, 5 more than two weeks ago. Last year there were 135 total distressed sales, 82% more than today.
  • There were 3,147 closed sales in May, an 18% increase over April 2017 and a 4% increase over May 2016. The sales to list price ratio was 97.8% for all of Orange County. Foreclosures accounted for just 1.1% of all closed sales and short sales accounted for 1.7%. That means that nearly 97.2% of all sales were good ol’ fashioned equity sellers.

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017

Orange County Housing Report July 5th 2017