Tag Archives: Orange County Housing Market

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

Orange County Housing Report June 22nd, 2017

Orange County Housing Report: Slim Pickens

For years now the Orange County housing inventory has been low, but this year it is more pronounced.

 

Low Supply: The active listing inventory has been down all year and it is currently off by 14% compared to 2016.

Whew! It is tough to be a buyer looking for a home in today’s market. The biggest complaint has to be that there are simply not enough choices. In fact, nearly 1,200 fewer homes have come on the market so far this year compared to last year. The active inventory currently sits at 5,905 homes; that is 14% fewer than the 6,868 that were available last year.

The trend of fewer homes hitting the market dates back to the beginning of the Great Recession, 2008. Ever since then, fewer and fewer homeowners have placed a FOR SALE sign in their yard. This trend is nothing close to a blip on the radar screen. Something happened to everybody’s collective psyche during the drawn out and bruising recession. Homeowners are staying put.

This year has been off from last year, averaging 222 fewer homes placed on the market each month. As the half way point for the 2017 housing market rapidly approaches, the slower pace has added up. Buyers who have been working hard to secure a home without any luck can attest to the need for additional choices. Yet, the 222 year over year difference is nothing compared to the number of homes on the market during the first decade of the 2000’s. In 2006, there were 2,239 additional homes FOR SALE coming on each and every month. That added up to an additional FOR SALE sign in just about every neighborhood on a monthly basis.

 

Price is determined by supply and demand. Just for kicks, imagine that demand remained the same. When the same number of buyers are interested in purchasing a home, yet the supply drops considerably, the highest bidder wins. As a result, prices rise. Essentially, that is what has happened over the past five years. In 2012, demand spiked; however, there were not enough homes on the market to satiate the voracious appetite for buyers to buy. Home values have been on the rise ever since.

In past housing run-ups, homeowners have been encouraged and enticed to join the fray, eager to cash in on the market and make a move. That has not been the case during the current five-year run. Homeowners have not been tempted to sell like they did from 2000 through 2007.

ADVICE FOR BUYERS: be realistic out of the gate. Don’t delay in pulling the trigger to write an offer to purchase a home. You do not have to overpay, especially now that the housing has transitioned into the Summer Market. Offer the FAIR MARKET VALUE of a home. Most of all, pack your patience.

ADVICE FOR SELLERS: be realistic out of the gate. Far too many sellers hit the market overpriced. The market has been on the rise, but it does a majority of its annual appreciation during the Spring Market. Homes appreciate at a much slower rate for the rest of the year. Orange County detached housing values have been increasing at a pace of about 5% per YEAR. That is 365 days, not 30 days. So, price accordingly. A wise strategy is to price a home at its FAIR MARKET VALUE. The better the price, the more activity that is generated. Multiple offers drive the sales price up.

Active Inventory: The active inventory increased by 3% in the past couple of weeks.

The active listing inventory added an additional 148 homes in the past two weeks, a 3% increase, and now sits at 5,905. Within the next couple of weeks, the inventory will eclipse the 6,000 home mark. Last year that occurred at the start of May.

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 6,868 homes on the market, 16% more than today.

Demand:  Demand increased by 1% in the past couple of weeks.

Demand, the number of homes placed into escrow within the prior month, increased by 33 pending sales in the past two weeks and now totals 2,937, a 1% increase. Demand is off the most in the entry-level market, homes priced below $500,000. With 23% fewer homes that have been placed on the market so far this year below $500,000, demand is now off by 21%. 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 Market.

Last year at this time, there were 52 more pending sales totaling 3,989, or 2% more. The expected market time increased from 59 to 60 days in the past couple of weeks. At 60 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 69 days.

Luxury EndLuxury demand increased by 6% in the past couple of weeks while the inventory grew by 2%.

In the past two weeks, demand for homes above $1.25 million increased from 351 to 371 pending sales, a 6% increase and nearly the same level as a month ago. The luxury home inventory increased from 1,981 homes to 2,011, up 2%.  Even with the increase in demand, the luxury market is NOT a robust seller’s market, taking months in order to find success.

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 108 to 96 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 144 to 148 days. In addition, for homes priced above $2 million, the expected market time decreased slightly from 256 days to 253 days. At 253 days, a seller would be looking at placing their home into escrow around the end of February of next year.

 

 

Orange County Housing Market Summary:

  • The active listing inventory increased by 148 homes, or 3%, in the past couple of weeks, and now totals 5,905, knocking on the door of the 6,000 home level. Last year, there were 6,868 homes on the market, 963 more than today.
  • There are 35% 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, increased by 1% in the past couple of weeks, adding 33 pending sales and now totals 2,937. The average pending price is $845,004.
  • 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 61% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 53 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 84 days, a tepid seller’s market.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 108 to 96 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 144 to 148 days. For luxury homes priced above $2 million, the expected market time decreased from 256 to 253 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 13% of demand.
  • The expected market time for all homes in Orange County increased from 59 days to 60 in the past couple of weeks, changing from a hot seller’s market to 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 1.2% of all listings and 2.1% of demand. There are only 25 foreclosures and 46 short sales available to purchase today in all of Orange County, that’s 71 total distressed homes on the active market, 5 fewer than two weeks ago. Last year there were 138 total distressed sales, 94% 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 June 7th, 2017

Orange County Housing Report: Time to Sharpen Your Pencil

To be successful during the Summer Market, it all boils down to price.

 

Achieving the Objective in Selling: Many sellers are pushing the envelope in terms of price and are risking not finding success and wasting valuable market time.

The transition from the Spring Market to the Summer Market is underway. Seemingly, everybody has become accustomed to multiple offers within days of placing the FOR SALE sign in the yard. With so many offers to purchase a home, a bidding war often arises. Reports of record prices swirl around neighborhoods. Many homeowners are tempted to join the fray.

Yet, the market has already started to shift. There aren’t as many multiple offers. Sellers who have stretched their asking prices above the most recent comparable pending and closed sales are sitting on the market without success.  Can the shift between the Spring and Summer Markets really be that significant? The answer is a resounding YES.
It is not like the market suddenly transitioned into a buyer’s market. It’s more about supply and demand and carefully pricing a home. Housing is drifting away from a hot seller’s market and moving towards a slight seller’s market. The supply of homes on the market has been on the rise throughout the Spring Market. It has increased by nearly 1,300 homes since the end of February, a 29% rise.

Orange County Housing Report

 

The inventory will continue to grow until it peaks around mid-August. More homes will come on the market at a similar pace to the spring, yet many unsuccessful homeowners will accumulate on the active listing inventory. The inventory swells due to this accumulation of unsuccessful sellers. This occurs in every price range, not just the luxury end. In fact, during the Summer Market of 2016, homes between $500,000 and $750,000 had the largest increase compared to any other price range, growing by 18%. The second largest, a 13% increase occurred for homes priced between $750,000 and $1 million.

Demand, the number of homes placed into escrow within the prior month, rocketed upward since the beginning of the year and continued to rise until it reached a peak for 2017 at the beginning of May. During the Spring Market, it increased from 2,651 at the end of February until the May peak of 3,012 pending sales, a rise of 361, or 14%. Since reaching the peak, demand has actually dropped by 4% and sits at 2,904 homes today.

Due to all of the distractions of summer, demand slowly drops. It’s still the second hottest season of the year behind spring, but the shift can be felt within the real estate trenches. The housing market is simply not as robust. It is no longer at a fever pitch that produces instantaneous throngs of potential buyers the moment a home comes on the market.

Orange County Housing Report

The bottom line: as the supply of homes increases throughout the summer months, it is met with slowly dissipating demand. As the supply increases and demand decreases, price becomes a lot more important in order for sellers to find success. Push the envelope on pricing and homes will sit. Buyers know that home values have been on the rise for years now, but that does not mean they want to stretch much above the most recent comparable closed sale.

Right now is the time of the year when sellers really need to have a reality check, or they risk not achieving their objective in selling their homes. Are they pushing the envelope by stretching the asking price too far above comparable sales? Or, are they priced realistically, close to their home’s Fair Market Value? In order to zero in on the Fair Market Value, it is imperative that a home is compared to the most recent pending and closed sales. Comparing prices is extremely important, but so is the condition, upgrades, location, lot size, and all of the other nuances that go into making a home more or less desirable.

For sellers who are overpriced, the longer they wait to correct their price, valuable market time will have transpired. Since demand slowly drops through the summer months, the deeper a seller gets into the Summer Market, the harder it will be to find success. The reason for the drop, buyers with families typically want to move by the end of summer prior to the kids going back to school at the end of August. In order to close a sale by then, the window of opportunity to place a home into escrow is now through the first few weeks of July.

The moral of the story: it is time for sellers to sharpen their pencils and properly price their homes in order to achieve their objective in selling.

Active Inventory: The active inventory increased by 2% in the past couple of weeks.

The active listing inventory added an additional 134 homes in the past two weeks, a 2% increase, and now sits at 5,757. 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 rear view mirror.

Within the last month, 8% fewer homes came on the market compared to last year. As a result, the active inventory has been off compared to last year. Last year at this time, there were 6,603 homes on the market, 15% more than today.

Demand:  The demand dropped by 10 pending sales in the past couple of weeks.

The number of homes placed into escrow within the prior month dropped by 10 pending sales in the past two weeks and now totals 2,904. Demand is off the most in the entry-level market, homes priced below $500,000. With 23% fewer homes that have been placed on the market so far this year below $500,000, demand is now off by 22%. This market has been underperforming all year due to a real lack of inventory.

We can expect demand to continue to drop slightly from now through the end of the Summer Market.

Last year at this time, there were 118 more pending sales totaling 3,022, or 4% more. The expected market time increased from 58 to 59 days in the past couple of weeks. Last year it was at 66 days.

Luxury EndLuxury demand dropped by 5% 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 369 to 351 pending sales, a 5% drop. Since the start of May, luxury demand has dropped by 15%. The luxury home inventory increased from 1,965 homes to 1,981, up 1%.  Similar to the rest of the market, demand is dropping for luxury homes while the luxury inventory continues to grow. There is already plenty of seller competition in the upper ranges.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 90 to 108 days. For homes priced between $1.5 million to $2 million, the expected market time decreased from 162 to 144 days. In addition, for homes priced above $2 million, the expected market time increased from 235 days to 256 days. At 256 days, a seller would be looking at placing their home into escrow around mid-February of next year.

Orange County Housing Report

 

Orange County Housing Market Summary:

  • The active listing inventory increased by 134 homes, or 2%, in the past couple of weeks, and now totals 5,757. Last year, there were 6,603 homes on the market, 846 more than today.
  • There are 35% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 22%. 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, dropped by 10 pending sales in the past couple of weeks and now totals 2,904. The average pending price is $842,204.
  • 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.
  • The homes priced below $750,000, the market is HOT with an expected market time of just 38 days. This range represents 38% of the active inventory and 60% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 54 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 21% of demand.
  • Homes priced between $1 million to $1.25 million, the expected market time is at 71 days, a seller’s market.
  • Luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 90 to 108 days. For homes priced between $1.5 million to $2 million, the expected market time decreased from 162 to 144 days. For luxury homes priced above $2 million, the expected market time increased from 235 to 256 days.
  • The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 12% of demand.
  • The expected market time for all homes in Orange County increased from 58 days to 59 in the past couple of weeks, a solid seller’s market (less than 60 days), but about to transition into a normal seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market, moving from a seller’s market to a slight seller’s market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.3% of all listings and 1.9% of demand. There are only 32 foreclosures and 44 short sales available to purchase today in all of Orange County, that’s 76 total distressed homes on the active market, 8 more than two weeks ago. Last year there were 148 total distressed sales, 95% more than today.
  • There were 3,143 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 old fashioned equity sellers.

 

 

Orange County Housing Report

 

 

Orange County Housing Report

 

 

Orange County Housing Report

 

 

Orange County Housing Report

 

 

Orange County Housing Report

This Month in Real Estate – April 2017

This Month in Real Estate – April 2017

Check out the National Numbers for April, 2017

 

This Month in Real Estate – March 2017

This Month in Real Estate – March 2017

Check out the National Number for March, 2017

 

Orange County Housing Report February 28th, 2017

Orange County Housing Report: OC Housing is Sizzling

With a very limited inventory, the Orange County housing market is extremely hot and values are on the rise.

Find out more in this Orange County Housing Report for February 28th, 2017.

Hot Housing Market: Everything on the market below $1 million is selling like hotcakes, and below $750,000 is nothing short of nuts.

The current Orange County housing market is scorching hot and has not been this good since July 2013. Once again, buyers are tripping over themselves to purchase. Homes that hit the market Orange County Housing Reportare fetching multiple offers within the first couple of days. Some buyers are writing offers on homes unseen. Others are waiving the appraisal contingency (still mandatory if they are getting a loan; so, if the appraisal comes in low, the buyer will have to bring in more money in order to close). When a home is priced at or close to its Fair Market Value, the purchase price is often higher than the asking price.

We are back to the bidding war days. When 10 offers to purchase are generated, there is only one victor. Nine buyers walk away and have to continue the pursuit of their dream home. This market can be extremely frustrating for a buyer. After a couple of failed attempts, many buyers sharpen their pencils and are willing to stretch in price even if it means paying more than the most recent comparable pending or closed sale. That is the nature of a housing market with very little inventory and very high demand.

The expected market time (the amount of time it would take for a newly listed home today to be placed into escrow) for all of Orange County is now at 50 days. When the expected market time drops below 60 days, the market is considered a solid seller’s market with steady price appreciation. Last year, Orange County was only below the 60-day threshold for about eight weeks, from mid-March through mid-May and never dropped below 55 days. It appears as if 2017 is going to be much hotter than the last few years.

When the expected market time dips below 30 days, the market shifts to a sizzling hot seller’s market with rapid price appreciation. In the past decade, the overall housing market has never reached this level, but many price ranges have. That is the case today as well. Not all of Orange County is considered “hot;” however, condominiums and detached homes priced below $500,000 are sizzling. This range represents 15% of the active listing inventory and 29% of demand.

Orange County Housing Report

 

Condominiums priced between $500,000 and $750,000, and detached homes priced between $500,000 and $1 million, are considered “solid” seller’s markets with expected market times between 30 and 60 days. They represent 24% of the current active inventory and 36% of demand. Both condominiums and detached homes priced between $500,000 and $750,000 are knocking on the door of a sizzling hot seller’s market with expected market times just above the 30-day threshold. That price range is starting to feel very hot and could easily drop below 30-days in the coming weeks.

Condominiums priced between $750,000 and $1 million and detached homes priced between $1 million and $1.5 million are currently experiencing a slight seller’s market, between 60 and 90 days. They represent 18% of the active listing inventory and 12% of demand. A slight seller’s market is characterized by slow, methodical price appreciation.

The market does not lean in the seller’s favor for detached homes priced above $1.5 million and condominiums priced above $1 million. The higher the price, the slower the market. They represent 30% of the inventory and only 9% of demand.

Buyers and sellers alike need to understand the market that they are working with in order to approach it with proper expectations. A buyer looking to purchase a $650,000 home is going to encounter a much different market than a buyer looking to purchase a $2 million home. Similarly, a condominium seller at $450,000 is going to experience a much different market than a condominium seller at $800,000.

A warning for buyers: do not expect the market dynamics to change much in the coming months. Even when more homes come on the market during the spring, there will be an increase in buyer activity as well.

A warning for sellers: do not stretch the asking price much at all. Overpriced, overzealous list prices result in wasted market time and do not generate offers. Pricing at or close to the Fair Market Value is the wisest formula for success.

Active Inventory: Within the past couple of weeks, the active inventory only increased by 12 homes.

Since January 1st, the active inventory has only grown by 389 homes. Within the past couple of weeks, it remained almost the same, growing by only 12 homes, a 0% increase, and now sits at 4,460. Once again, nearly everything that is coming on the market at or close to its Fair Market Value is being placed into escrow almost immediately.

Part of the issue is that, so far this year, 8% fewer homes have come on the market compared to last year at this time. The combination of a limited supply of homes coming on the market and ferocious demand has created the current sizzling hot Orange County housing market. More and more homeowners will come onto the market this spring through mid-August.

Last year at this time, there were 5,271 homes on the market, 15% more. Two years ago, there were 973 more homes on the market, or 18% more.

 

Orange County Housing Report

 

Demand:  Demand is HOT, increasing by 10% in the past two weeks.

The only thing holding back current demand is the lack of supply of homes. There are simply not enough new sellers coming on the market. Even with very few choices right now, buyers are pouncing on everything new that hits the market that is reasonably priced and in decent condition.

Demand, the number of homes placed into escrow within the prior month, increased by 248 pending sales in the past couple of weeks, or 10%, and now totals 2,651. With an increase in demand and an inventory that remained the same, the expected market time dropped from 56 days to 50 days, a solid seller’s market.

Last year at this time, there were 2,584 total sales, 67 fewer than today, or 3% less.

Luxury EndThe luxury market is starting to heat up a bit.

Demand is up for Orange County’s luxury home market with 73 additional pending sales compared to last year at this time, 19% higher. The luxury inventory is up by only 3 homes, nearly identical. The overall expected market time for all homes priced above $1 million is 122 days compared to 144 days last year.

In the past two weeks, demand for homes above $1 million increased from 412 to 465 pending sales, a 13% rise, its highest level since the end of August. The luxury home inventory increased from 1,834 homes to 1,891, its highest level since the start of December 2016.  The expected market time decreased in the past couple of weeks from 134 to 122 days.

For homes priced between $1 million to $1.5 million, the expected market time in the past couple of weeks decreased from 80 days to 76 days. For homes priced between $1.5 million to $2 million, the expected market time decreased from 153 to 129 days. For homes priced above $2 million, the expected market time dropped from 252 days to 227 days. At 227 days, a seller would be looking at placing their home in escrow around mid-October.

Orange County Housing Report

 

Orange County Housing Market Summary:

  • The active listing inventory increased by 12 homes in the past couple of weeks, a 0% rise, and now totals 4,460. There are 8% fewer homes that have come on the market this year compared to 2016. The inventory should start to rise in March and peak in mid-August.
  • There are 44% fewer homes on the market below $500,000 compared to last year at this time and demand is down by 7%. Fewer and fewer homes and condominiums can now be found priced below $500,000. This price range is slowly vanishing.
  • Demand, the number of pending sales over the prior month, increased by 10% in the past couple of weeks, adding an additional 248 and now totals 2,651. Today’s demand is 3% higher than last year when it totaled 2,584. The average pending price is $835,152.
  • The average list price for all of Orange County is $1.6 million, identical to two weeks ago. This number is high due to the mix of homes in the luxury ranges that sit on the market.
  • For homes priced below $750,000, the market is HOT with an expected market time of just 34 days. This range represents 39% of the active inventory and 65% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 54 days, a seller’s market (less than 60 days). This range represents 19% of the active inventory and 18% of demand.
  • For luxury homes priced between $1 million to $1.5 million, the expected market time is at 76 days, dropping by 4 in the past couple of weeks. For homes priced between $1.5 million to $2 million, the expected market time decreased from 153 to 129 days. For luxury homes priced above $2 million, the expected market time decreased from 252 to 227 days.
  • The luxury end, all homes above $1 million, accounts for 42% of the inventory and only 17% of demand.
  • The expected market time for all homes in Orange County dropped in the past couple of weeks from 56 to 50, a solid seller’s market (less than 60 days).
  • Distressed homes, both short sales and foreclosures combined, make up only 1.9% of all listings and 3.2% of demand. There are only 18 foreclosures and 67 short sales available to purchase today in all of Orange County, that’s 85 total distressed homes on the active market, 18 fewer than two weeks ago, a drop of 17% and its lowest level since the start of the Great Recession 10 years ago. Last year there were 152 total distressed sales, 79% more.
  • There were 1,905 closed sales in January, a 33% drop from December, but more than the 1,859 closed sales posted in January 2016. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.9% of all closed sales and short sales accounted for 2.3%. That means that 96.8% of all sales were good ol’ fashioned equity sellers.

 

Orange County Housing Report

 

 

Orange County Housing Report

 

 

Orange County Housing Report

 

 

Orange County Housing Report

 

 

 

Orange County Housing Report