Tag Archives: Orange County Housing Report

Orange County Housing Report February 13th, 2018

Orange County Housing Report:
“The Spring Market Has Arrived”

Orange County Housing Report February 13th, 2018

With demand exploding onto the scene, it is officially the
best season to sell a home.

 

Spring Market: The activity below $1 million is nothing short of CRAZY!!

In Southern California, it is hard to tell the seasons apart. You have to look up at the trees to see if there are leaves or not. The time of the sunset is another dead giveaway. Are there flowers yet?

Similarly, there are signs that the housing market has officially changed. There is a steady stream of buyers at open houses for all homes priced below $1.25 million. Sellers are entertaining multiple offers within days of coming on the market. Buyers are writing offers before even seeing the home. That’s right; the crazy Spring Market has arrived.

Many are scratching their heads knowing that the first day of spring is not until March 20th. That is when the days are longer, the flowers are blooming, and trees are sprouting their new leaves. However, the Spring Market in Southern California actually starts in February and runs all the way through the end of May. The expected market time, the amount of time it would take to place a home onto the market and then into escrow dips to its lowest level of the year. Orange County housing is already moving at a feverish pitch.

This year will be similar to 2017 when the expected market time dipped below 60-days, considered a hot, seller’s market, throughout the entire Spring Market. Spring 2018 is going to be hot. Buyers will be faced with tremendous competition to buy, and sellers will be running the table.

The market is very hot for attached homes, currently running at 41 days. It is a hot, seller’s market for all attached homes priced below $1 million. The hottest range is condominiums priced between $250,000 and $750,000. That range represents 82% of all attached home demand.

Take a look at the velocity of the market already. For detached homes, the expected market time dipped below 60-days for the first time since the start of April 2017. It is less than a month, 29-days, for homes priced below $500,000. For homes priced between $500,000 and $750,000, it is a 31-day market. It is a hot market for homes priced between $750,000 and $1 million with a 39-day expected market time. From $1 million to $1.25 million, it too is below the 60-day threshold at 51-days. From $1.25 million to $1.5 million, it is still considered a seller’s market, just not a mad rush like the lower ranges.

For detached homes priced above $1.5 million and attached homes priced above $1 million, the market does not lean in the seller’s favor. As prices rise, sellers are faced with a much slower market. They represent 31% of the inventory and only 9% of demand.

For the rest of the market, we are back to bidding wars. When a home procures 15 offers, there is only one winner. The other 14 buyers need to go back to the drawing board and start the process all over again. It is extremely frustrating being a buyer in today’s market. After losing out on one or two homes, most buyers sharpen their pencils and are prepared to write very strong offers in their attempt to secure a home, maybe even stretch the offered price a bit. That is how buyers have been approaching the hot Spring Market selling season since 2012.

Warning to Buyers: regardless of rising interest rates and the volatility of Wall Street, the market is not going to change anytime soon and tilt in the buyer’s favor. The trends are lined up in favor of sellers with tremendous demand and a very low supply of homes to purchase.

Warning to Sellers: pricing very close to the most recent comparable pending and closed sales is fundamental in order to find success. The active inventory has already started to increase despite red-hot demand. This is due primarily to the fact that many sellers cannot help themselves. They ignore the comparable data and reach for the moon, overpricing their homes and sitting on the market without success.

 

Active Inventory: The active inventory increased by 5% in the past couple of weeks.

The active listing inventory added an additional 207 homes in the past two-weeks, a 5% increase, and now sits at 3,981. The inventory will cross the 4,000 home threshold this week and will continue its climb through the summer. The inventory is actually increasing at a faster clip than last year at this time. Moreover, it is occurring at a time when demand is hot. It is too early to tell if this trend will continue, enabling the inventory to surpass last year’s heights.

Last year at this time, there were 4,448 homes on the market, 12% more than today. The year over year difference has slowly been diminishing.

 

Demand:  Demand increased by 58% in the past month.

Demand, the number of new pending sales over the prior month, has exploded onto the scene and increased by 839 pending sales over the past 4-weeks and now totals 2,286, its highest level since November. Demand will continue to rapidly increase from now through April and will peak sometime between April and May.

Last year at this time, demand was at 2,430 pending sales, 117 more than today, or 5%. This is primarily due to fewer homes on the active listing market since the start of the year. As more homes come enter the fray during the Spring Market, demand will achieve similar levels compared to 2017.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, decreased from 64 to 52 days in the past two weeks, a hot, seller’s market.

Luxury End:  Luxury demand dramatically increased in the past two weeks. 

In the past two weeks, demand for homes above $1.25 million increased from 241 to 336 pending sales, up an incredible 39%. The luxury home inventory increased from 1,429 homes to 1,540, an 8% rise in the past two-weeks. Expect both demand and the inventory to rise throughout the Spring Market. The current expected market time for all homes priced above $1.25 million plunged from 178 days to 138. The luxury range is heating up, but nothing like the lower ranges with an expected market time of just 36 days for homes below $1 million.

For homes priced between $1.25 million and $1.5 million, the expected market time dropped from 112 to 81 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 145 to 122 days. For homes priced between $2 million and $4 million, the expected market time decreased from 221 days to 163. In addition, for homes priced above $4 million, the expected market time dipped from 355 to 349 days. At 349 days, a seller would be looking at placing their home into escrow around the end of January 2019.

 

 Orange County Housing Market Summary:

  • The active listing inventory increased by 207 homes in the past two weeks, up 5%, and now totals 3,981. Expect the inventory to increase from now through mid-Summer. Last year, there were 4,448 homes on the market, 467 more than today.
  • There are 29% 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, skyrocketed in the past two weeks by adding an additional 522 pending sells, up 30%. The average pending price is $909,074.
  • The average list price for all of Orange County remained at $1.8 million over the past two weeks. 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 33 days. This range represents 36% of the active inventory and 57% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 43 days, a hot seller’s market (fewer than 60 days). This range represents 17% of the active inventory and 21% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 54 days, a hot seller’s market.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time dropped from 112 days to 81. For homes priced between $1.5 million and $2 million, the expected market time decreased from 145 to 122 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 221 days to 163 days. For luxury homes priced above $4 million, the expected market time fell from 355 to 349 days.
  • The luxury end, all homes above $1.25 million, accounts for 39% of the inventory and only 14% of demand.
  • The expected market time for all homes in Orange County dropped from 64 days to 52 in the past two weeks, a hot seller’s market (fewer than 60 days). From here, we can expect the market time to drop a little bit more by the end of the month.
  • Distressed homes, both short sales and foreclosures combined, make up only 1% of all listings and 2.3% of demand. There are only 16 foreclosures and 23 short sales available to purchase today in all of Orange County, that’s 39 total distressed homes on the active market, dropping by 8 in the past two weeks and reaching its lowest level since the very beginning of the Great Recession. Last year there were 103 total distressed sales, 164% more than today.
  • There were 1,799 closed residential resales in January, down by 9% from January 2017’s 1,904 closed sales. January marked a 21% drop from December 2017. The sales to list price ratio was 97.6% for all of Orange County. Foreclosures accounted for just 1.1% of all closed sales and short sales accounted for 0.8%. That means that 98.1% of all sales were good ol’ fashioned sellers with equity.

 

 

 

 

 

 

 

 

 

 

Orange County Housing Report January 31st, 2018

Orange County Housing Report:
“On Your Mark, Get Set, Go!!!”

Orange County Housing Report January 31st, 2018

With the holidays behind us, the 2018 Orange County housing market is beginning to rev its engine.

 

Heating Up Fast: With a low housing supply and fierce demand, the housing market is accelerating fast.

In the blink of an eye, Starbucks holiday cups are gone, all of the ornaments are tucked away, and most of those good intentioned New Year’s resolutions have fallen victim to the hustle and bustle of everyday life. Emerging from the fog of all of the holiday distractions are buyers eager and ready to purchase their next home.

In just two weeks, demand has increased 22% while supply has only increased 2%. To understand why the market is changing so rapidly, let’s dust off that old Econ 101 book that details supply and demand. When there is a lot of supply and very little demand, prices fall, which favors buyers. When there is very little supply and tremendous demand, prices rise, which favors sellers. Since 2012, the supply of homes on the market has been severely constrained and demand, propped up by historically low-interest rates, has been through the roof.

When the supply of homes is low and demand to buy a piece of the “American Dream” is high, the expected market time falls. That is precisely what is occurring right now. During the Holiday Market, the supply of homes was low and so was demand. Buyers were distracted by the holidays and diverted their attention away from housing. Now that the holidays are in the rearview mirror, the supply of homes has remained at chronically low levels, while demand is rapidly rising. As a result, the expected market time, the amount of time it would take from placing a home on the market to opening escrow, is falling like a rock.

 

 

In just two weeks, the expected market time for all price ranges combined dropped from 77 days to 64, knocking on the door of an extremely hot seller’s market. For homes priced below $1 million, the market is already hot and will only grow hotter. The higher price ranges will also heat up, but will not sizzle like the lower ranges. Above $1.5 million, the market will improve but will be a lot more sluggish.

The housing market is forging its way to the absolute best time to sell, from about mid-February through mid-May. That is when the expected market time drops to its lowest levels of the year. Homes will fly off the market at the fastest annual rate. From mid-May through June, a deluge of sellers enter the fray, exceeding the number of pending sales, and the expected market time actually rises. Going back to “supply and demand,” demand remains steady and strong while the supply of homes on the market increases. As a result, the expected market time rises. It is still a great time to sell, just not as hot as earlier in the year. From July through the remainder of 2018, the expected market time will remain elevated.

It is extremely important to note that placing a home on the market during the hottest time of the year does not guarantee success. It is still all about price. When sellers price their homes too aggressively, they sit on the market and do not entertain offers to purchase. A stunning 25% of all homes that have been placed into escrow so far this year had to reduce their asking price at least once. When the market is hot, carefully pricing a home close to its Fair Market Value is the absolute best way to approach the market. This can be accomplished by diligently analyzing recent comparable pending and closed sales and not giving too much weight to active listings. A realistic price will attract multiple offers to purchase and, often times, will allow a seller to fetch a sales price at or higher than the active listing price.

The market is not titling in favor of buyers and will not anytime soon. Buyers should approach the market with a ton of patience and the mindset that they will eventually persevere. It may take writing offers on 10 different homes, but in the end will be worth it. Interest rates are still at historically low rates, but this gift will not last forever. Waiting is not the answer.

 

Active Inventory: The active inventory increased by only 67 homes in the past couple of weeks.

The active listing inventory added an additional 67 homes in the past two-weeks, a 2% increase, and now sits at 3,774. The biggest issue for Orange County housing this year has been a real lack of inventory. Thus far in 2018, there have been 6% fewer homes placed on the market. This issue has prevented additional closed sales and has been undermining the true potential for housing. If there were more homes for sale, there would be more pending and closed sales.

We can expect the inventory to continue to rise from now through mid-summer until it reaches a peak somewhere between mid-July and mid-August. The velocity of homes coming on the market will pick up steam in mid-March as the active inventory climbs at is highest rate of the year.

Last year at this time, there were 4,320 homes on the market, 14% more than today.

 

Demand:  Demand increased by 22% in the past couple of weeks.

Buyers are extremely eager to purchase, yet are faced with a very anemic inventory. Buyers are gobbling up inventory nearly as fast as homes are placed onto the market. As a result, in the past two weeks, demand, the number of new escrows over the prior month, increased by 317 pending sales, or 22%, and now totals 1,764. That’s the largest gain since the start of February of last year. The housing market is only revving the engine at this point. Expect demand to continue to accelerate from here until it peaks sometime in May.

 

 

Last year at this time, demand was at 1,930 pending sales, 166 more than today, or 9%. This is primarily due to fewer homes coming on the market. There simply are not enough choices.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, decreased from 77 to 64 days in the past two weeks, a seller’s market with mild appreciation.

 

Luxury End:  Luxury demand has thawed and dramatically improved in just two weeks. 

In the past two weeks, demand for homes above $1.25 million increased from 170 to 241 pending sales, up a staggering 42%. The luxury home inventory increased from 1,376 homes to 1,429, a 4% rise in the past two-weeks. Expect both demand and the inventory to rise from now through the Spring Market. The current expected market time for all homes priced above $1.25 million plunged from 243 days to 178.

For homes priced between $1.25 million and $1.5 million, the expected market time dropped from 157 to 112 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 188 to 145 days. For homes priced between $2 million and $4 million, the expected market time decreased from 285 days to 221 days. In addition, for homes priced above $4 million, the expected market time dipped from 695 to 355 days. At 355 days, a seller would be looking at placing their home into escrow around January 2019.

 

 

Orange County Housing Market Summary:

  • The active listing inventory increased by 67 homes in the past two weeks and now totals 3,774. Expect the inventory to increase from now through mid-Summer. Last year, there were 4,320 homes on the market, 546 more than today.
  • There are 25% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 28%. 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, skyrocketed in the past two weeks by adding an additional 317 pending sells, up 22%. The average pending price is $902,385.
  • The average list price for all of Orange County remained at $1.8 million over the past two weeks. 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 37% of the active inventory and 59% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 55 days, a hot seller’s market (fewer than 60 days). This range represents 17% of the active inventory and 20% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 68 days, a slight seller’s market (between 60 and 90 days).
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time dropped from 157 days to 112. For homes priced between $1.5 million and $2 million, the expected market time decreased from 188 to 145 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 285 days to 221 days. For luxury homes priced above $4 million, the expected market time fell from 695 to 355 days.
  • The luxury end, all homes above $1.25 million, accounts for 37% of the inventory and only 13% of demand.
  • The expected market time for all homes in Orange County dropped from 77 days to 64 in the past two weeks, a slight seller’s market (60 to 90 days). From here, we can expect the market time to drop dramatically through mid-February.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.2% of all listings and 2.2% of demand. There are only 15 foreclosures and 32 short sales available to purchase today in all of Orange County, that’s 47 total distressed homes on the active market, dropping by 3 in the past two weeks and reaching its lowest level since the very beginning of the Great Recession. Last year there were 91 total distressed sales, 74% more than today.
  • There were 2,269 closed residential resales in December, down by 9% from December 2016’s 2,484 closed sales. December marked a 6.5% drop from November 2017. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.9%. That means that 98.3% of all sales were good ol’ fashioned sellers with equity.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Orange County Housing Report January 31st, 2018

Orange County Housing Report January 17th, 2018

Orange County Housing Report:
“That Was a Close One!”

Orange County Housing Report January 17th, 2018

After starting the year with nearly nothing on the market, the active inventory is on the rise.

Not 2013: The active listing inventory increased by 9% since New Year’s Day.
The housing market has been on a tear for six years now and is showing no signs of letting up. Two long-term trends emerged during the run that is also showing no signs of diminishing anytime soon: unrelenting, hot demand and a chronic lack of homes on the market.

Demand has been juiced by historically low-interest rates for the entire six-year run. In spite of experts and prognosticators forecasting a rise in the long-term rate for years now, mortgage rates have remained steady, never exceeding 4.5% (reached in September 2013). In fact, today’s rates are still bouncing around 4% and are not expected to rise much in 2018. These persistent, historically low rates dramatically improve home affordability, and, ultimately, prop up demand.

The chronic lack of homeowners placing FOR SALE signs in their front yards has been the Achilles heel to this housing run. Years of juiced demand and a low supply of homes on the market has resulted in rapid appreciation, fewer total yearly home sales, and frustrated buyers, especially entry level, first-time buyers. Multiple offers and sales prices at or above their list price is the norm for homes priced below $1 million (81% of all closed sales in 2017). It has been a deep seller’s market for years now with nothing indicating a change on the horizon. Buyers will have to continue to navigate the harsh reality of plenty of competition with very few choices.

Fewer choicesis exactly how 2018 started. On New Year’s Day, the active listing inventory was at 3,397 homes, the second lowest start in the past 13 years. Only 2013 was lower, with 3,161 homes on the market. With such an anemic inventory, the biggest worry to start the year was that 2018 would shape up to be just like 2013. In 2013, the inventory did not increase much at all for the first three months and the market heavily favored sellers (typically, the inventory rises from January through mid-August). The expected market time dropped to 33 days for all of Orange County by March 2013. Sellers were able to stretch their asking prices quite a bit over the most recent sale and they often got their price. It felt impossible for buyers to secure a home, especially if they had a small down payment. They just would not be able to compete. The 2013 housing market proved to be extremely challenging.

Yet, 2018 is shaping up to be completely different than 2013. Since starting the year at 3,397 homes, the active inventory has increased by 9%, adding an additional 310 homes, and now totals 3,707. The expected market time is currently at 77 days, quite a bit slower than the 45day expected market time at the beginning of 2013. It is not as deep of a seller’s market; so, homes will not appreciate as fast as they did in 2013. Remember, home prices are a lot higher today compared to 5 years ago. Buyers are not willing to dramatically overpay for a home compared to the most recent closed sale. If a home is placed on the market and is not priced according to its Fair Market Value, opting to significantly pad the price and take a stab at getting more, it will sit on the market and will not sell.

Carefully pricing is a fundamental ingredient in achieving the objective of selling a home. In December, 59% of all closed sales had to reduce the asking price at least once. It was not the time of the year; it was the inability for many sellers to price their homes accurately right out of the gate.

From here, we can expect the inventory to continuously rise from now through mid-Summer. It will fall short of the long-term average of 8,000 homes, which is where the inventory needs to be for an extended period of time for the market to transition into a balanced market, one that does not favor a buyer or seller.

Demand:  Demand decreased by 10% in the past couple of weeks.
In the past two weeks, demand, the number of new escrows over the prior month, decreased by 158 pending sales, or 10%, and now totals 1,447. This is a true reflection of cyclically the slowest time of the year, the last 30-days. This period encompasses all of the holidays and all of its distractions. Also, with so few homes coming on the market, coupled with very limited choices of active listings, it’s no wonder demand has dropped to such a low level. As more homes enter the fray, expect demand to start to rocket upward by the end of this month.

Last year at this time, demand was at 1,562 pending sales, 115 more than today, or 8%.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, increased from 67 to 77 days, a slight seller’s market with mild appreciation. Last year’s expected market time was at 84 days. The expected market time will significantly drop by the end of this month.

Luxury End:  Luxury demand continued its holiday/winter plunge.
In the past two weeks, demand for homes above $1.25 million decreased from 187 to 170 pending sales, down 9%. The luxury home inventory decreased from 1,391 homes to 1,376, a 1% drop in the past two-weeks. Since the start of November 2017, luxury demand dropped by 52%, while the luxury inventory dropped by only 20%. Expect both demand and the inventory to rise from now through the Spring Market. The current expected market time for all homes priced above $1.25 million increased from 223 days to 243.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 123 to 157 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 196 to 188 days. For homes priced between $2 million and $4 million, the expected market time increased from 266 days to 285 days. In addition, for homes priced above $4 million, the expected market time increased from 667 to 695 days. At 695 days, a seller would be looking at placing their home into escrow around December 2019.


Orange County Housing Market Summary:

  • The active listing inventory increased by 310 homes since the start of the New Year and now totals 3,707. Expect the inventory to increase from now through mid-Summer. Last year, there were 4,376 homes on the market, 669 more than today.
  • There are 31% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 28%. 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, plunged by 158 in the past couple of weeks, down 10%, and now totals 1,447, most likely its lowest point of the year. The average pending price is $839,613.
  • The average list price for all of Orange County decreased to $1.8 million after reaching a record $1.9 million two weeks ago. 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 46 days. This range represents 38% of the active inventory and 62% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 67 days, a slight seller’s market (between 60 and 90 days). This range represents 17% of the active inventory and 19% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 101 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 increased from 123 days to 157. For homes priced between $1.5 million and $2 million, the expected market time decreased from 196 to 188 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 266 days to 285 days. For luxury homes priced above $4 million, the expected market time increased from 667 to 695 days.
  • The luxury end, all homes above $1.25 million, accounts for 36% of the inventory and only 12% of demand.
  • The expected market time for all homes in Orange County increased from 67 days to 77 in the past two weeks, a tepid seller’s market (60 to 90 days). From here, we can expect the market time drop dramatically by the end of this month.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.3% of all listings and 2.7% of demand. There are only 17 foreclosures and 33 short sales available to purchase today in all of Orange County, that’s 50 total distressed homes on the active market, dropping by 11 in the past two weeks and reaching its lowest level since the very beginning of the Great Recession. Last year there were 112 total distressed sales, 124% more than today.
  • There were 2,269 closed residential resales in December, down by 9% from December 2016’s 2,484 closed sales. December marked a 6.5% drop from November 2017. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.9%. That means that 98.3% of all sales were good ol’ fashioned sellers with equity.

 

Orange County Housing Report January 2nd, 2018

Orange County Housing Report:
HAPPY NEW YEAR!!!  Now, what does that mean for Orange County real estate?

Orange County Housing Report January 2nd, 2018

First, let’s take a look back at what happened in 2017 in terms of the inventory, demand, expected market time, luxury properties, and distressed properties. 

Active Inventory: A chronic lack of inventory defined 2017 and the year finished at levels not seen since 2013.
The year started with an active inventory of 4,071 homes on the market and ended with 3,560. It was the second lowest start to a year behind 2013. Ever since the Great Recession, the trend has been fewer homeowners selling their homes. Since 2009, the number of homes placed on the market has diminished by 28% compared to the heydays of 2000 through 2007. In 2017, the issue was magnified with 6% fewer homes coming on the market compared to 2016.Cutting into the inventory a bit were closed sales. In 2017, closed sales were nearly identical to 2016 despite fewer homes coming on the market.The active inventory did not really climb much. The theme throughout the year was the anemic feel to the housing inventory. There just were not enough homes on the market below $1 million (82% of all closed sales in 2017 could be found below $1 million) and the market remained hot all year long for this range. The peak in the active inventory was reached in mid-July with 5,983 homes on the market. That was the lowest peak in decades. Last year’s peak of 7,329 homes, 22% higher, was also reached in mid-July. Typically, the peak is attained in mid-August, but there have not been enough homes coming on the market during the summer months compared to prior years.

The active inventory has remained at anemically low levels since the start of 2012 and has been a seller’s market ever since. The long-term active listing inventory average is 8,000 homes, and it has only reached that level for a few weeks in the summer of 2014.

In order for the market to start tilting in the buyer’s favor, the active inventory not only has to eclipse the 8,000 home mark; it needs to remain consistently above that threshold for a sustained period of time. Only when there is extra supply will appreciation slow. Until then, we can expect more of the same, slow methodical appreciation.


Residential resale homes in Orange County have been appreciating at a pretty solid 5% clip for three years now. In spite of the chronically anemic supply of homes, sellers still did not get away with stretching the asking price. Buyers were willing to stretch a bit, especially for detached homes priced below $750,000 and for condominiums priced below $500,000. Yet, sellers who were a bit too overzealous and pumped up their prices ultimately sat on the market until they made an adjustment more in line with their true Fair Market Value.

The inventory grew by only 37% from January through July. With not enough homes coming on the market all year, coupled with the same number of closed sales as 2016, the inventory dropped by 40% by the end of 2017. In the past two weeks alone, the inventory has shed 12%, 463 homes, and now totals 3,560, the lowest level since April 2013. Over the past thirteen years, only 2013 had fewer homes to start a New Year with 3,161. Home price appreciation and hot market expectations that favor sellers has everything to do with supply and demand. With such an extremely low supply, 2018 is definitely starting on the right foot.

DemandWith historically low-interest rates around 4%, demand continued to thrive in Orange County.
Demand for Orange County homes (the number of pending sales over the prior month) followed a normal strong housing pattern. The local housing market revved its massive engine in February, and by April, another strong housing market emerged with plenty of activity. Demand remained elevated and strong throughout the Spring and Summer Markets and did not cool until September, the Autumn Market. Of course, demand slowed considerably from Thanksgiving on, typical for the Holiday Market.

Interest rates remained low and have not really changed much over the past few years, even dipping below the 4% level for a period of time in 2017. Investors from around the world continue to invest in long-term government bonds, especially the United States treasuries. As a result, interest rates have remained at historical lows and do not appear to be changing much anytime soon. Despite higher prices in Orange County, the low-interest rates environment has helped home affordability and buyers have been taking advantage of it.

Even though the median sales price has surpassed 2007 record levels, homes are still more affordable due to favorable interest rates. For proper perspective, in 1990 the interest rate was at 10%. In 2000, it was 8%. And, just prior to the Great Recession, interest rates were at 6.4%. A $650,000 mortgage at 4% has a payment of $3,103. Compare that to a payment of $4,066 at 6.4%. It is no wonder that buyers are still flocking to purchase even with home values rising to record levels.Low-interest rates are facilitating affordability and propping up demand.

Within the past two weeks, demand dropped by 259 pending sales, or 14%, and now sits at 1,605. Last year at this time, demand was at 1,697, or 6% more than today.

Luxury EndMore homes sold in the luxury end this year than ever before.
Orange County’s luxury home market continues to pump on all cylinders. More homes have closed above $1.25 million than ever before in the county. There were 3,895 closed luxury sales compared to 3,249 last year, up 20%. The highest level prior to the recession occurred in 2005 with 2,857 closes sales. It is safe to say that the luxury housing market in Orange County is on solid footing.

Despite the record number of closed sales in the luxury range, the market still felt sluggish compared to the lower ranges. That was simply due to supply and demand. With the exception of homes priced between $1.25 and $1.5 million, the expected market time soared to levels considered buyer market territory. There simply were not enough buyers actively looking to buy. On the other hand, there were plenty of sellers competing with each other, the higher the price, the slower the market. Homes did not fly off the market with multiple offers like the lower ranges.

Year over year, the luxury inventory tracked about the same in terms of inventory. Luxury demand was considerably strong during the spring, 36% higher in April compared to 2016. By year’s end, demand was almost identical.

In the past two weeks, demand for homes above $1.25 million decreased from 217 to 187 pending sales, down 14%. Luxury demand has dropped 42% since the start of November. The luxury home inventory decreased from 1,490 homes to 1,391, a 7% drop in the past two-weeks. The inventory has dropped by 19% since the start of November.

Distressed Properties: Foreclosures and short sales are nothing more than an asterisk to the 2017 market.
In Orange County, homes have appreciated substantially since the beginning of 2012. With a six-year run in housing, the number of underwater homes has declined to 1.2% of all homes with a mortgage. During the Great Recession, the number climbed to as high as 25%. In 2017, distressed sales were nothing more than an asterisk to an overall healthy, nearly recovered housing market, almost not worth mentioning in reviewing 2017.Back in 2012, distressed homes accounted for 36% of closed sales. In 2017, with over 31,000 closed sales, there were only 274 foreclosures or 0.9%. And, there were only 342 closed short sales, or 1.1%. That means that 98% of all closed sales were good ol’ fashioned homeowners with equity.The distressed active listing inventory started the year at 112 total foreclosures and short sales and ended the year at 61, a 44% drop.

Expected Market Time: Based upon the low inventory and hot demand, it was a solid seller’s market the entire year.
The expected market time (the length of time it would take to place a home into escrow based upon current supply and demand) remained below the 90-day mark all year, continuously tipping in the seller’s favor. It dipped below 60 days, a HOT seller’s market where homes appreciate at a faster clip, from February through May, the longest stretch since 2013.  Since then, the expected market time has not risen that much. For buyers looking to purchase below $1 million, they simply have not had a break. Multiple offers have been the norm all year long.

The expected market time for all of Orange County grew to 67 days in the past two weeks but is an excellent start to the New Year. In fact, in the past 13 years, 2018 will have the second-best start. The best start to a year occurred in 2013 with an expected market time of 47 days.

For homes priced below $1 million, the expected market time is at 43 days. For homes over $1 million, the expected market time rises to 135 days or 4.5 months.

Orange County has not experienced equilibrium, a market that does not favor a buyer or seller, between 3 and 4 months, since the second half of 2014. It has not been a buyer’s market, above the 4-month mark, since the start of 2011.
The 2018 Forecast: More of the same.
There have not been many changes to the U.S. economy. No shocks to the economic engine. That all changed with the new tax bill that was signed into law on December 22nd. The mortgage interest deduction was lowered from $1 million to $750,000. Equity lines of credit are no longer deductible. State and local property taxes deductions are capped at $10,000. The cards seem to be stacked against Californians and, more specifically, Orange County residents. Yet, with a chronically anemic inventory and demand juiced by historically low-interest rates, the tax bill will not have a major impact on the local housing market like so many fear. Here is the forecast:
  • Interest Rates – even with the Federal Reserve raising the short-term rate three times in 2017, interest rates continue to float around the 4% level. The Federal Reserve meets eight times per year and it will most likely pull the trigger on further increases three more times in 2018. Yet, these changes in the short-term rate will not have much of an impact on long-term rates. They do not move together. By year’s end, expect interest rates to stretch only to 4.25%.
  • Active Inventory – the year will begin with an extremely anemic inventory, around 3,500 homes, that will translate to a very hot start for housing. Just as in 2017, the theme of 2018 will be not enough homeowners opting to place their homes on the market. As a result, the active inventory will not reach the long-term 8,000 home average. Expect the inventory to peak in July between 6,500 to 7,000 homes.
  • Demand –with an anemic inventory and buyers anxious to cash in on historically low rates (many wrongly see the Federal Reserve increases in the short-term rate as a precursor to higher mortgage rates), demand will be strong throughout the Spring and Summer Markets. Buyers will be willing to stretch slightly in price compared to the most recent sale; so, expect appreciation around 4 to 5% for the year. Demand will be strongest, and most appreciation will occur, from April through August, and then will downshift during the Autumn and Holiday Markets.
  • Housing Cycle – the housing market will follow a normal housing cycle. The strongest demand coupled with plenty of fresh inventory will occur during the Spring Market. This will be followed by slightly less demand and a continued new supply of homes in the Summer Market. From there, demand will drop further along with fewer homes entering the fray in the Autumn Market. Finally, all the distractions of the Holiday Market will be punctuated with the lowest demand of the year and few homeowners opting to sell.
  • Closed Sales – the number of successful, closed sales will be similar to 2017, just over 31,000. There will be slightly more “move-up” sellers, which will prove to be a wise decision as mortgage rates rise down the road and affordability starts to erode.
  • Luxury Market – luxury sales will increase slightly from 2017’s record. The Spring Market will be the strongest for luxury, and the second half of the year will be quite a bit more sluggish.
  • Distressed Inventory – the distressed inventory will remain low with a very similar level of successful short sales and foreclosures, representing just less than 2% of all sales.
The bottom line, 2018 will fill a whole lot like 2017 with not enough homes on the market and buyers tripping over each other to purchase. Multiple offers will be the norm for homes priced below $1 million. Once again, the market will heavily favor sellers and buyers will have to pack their patience in order to isolate their piece of the American Dream.

Happy New Year!

Orange County Housing Report December 5th, 2017

Orange County Housing Report:

“A Holiday Lull”

The Holiday Market is in full swing, bringing a lot less inventory and the lowest level of new deals for the year.

Orange County Housing Report December 5th, 2017

The Holiday Slowdown: Year in and year out December is notoriously the slowest month of the year in terms of demand and new sellers placing their homes on the market. 

In a blink, the housing market transitioned from the Autumn Market to the Holiday/Winter Market. As everybody carved the turkey and filled their bellies with a smorgasbord of food, we ushered in a dramatic shift in housing. This is the time of the year when housing takes a back seat to all of the distractions of the holidays.

Christmas lights now trim neighborhood rooflines. The local mall parking lots are filled to capacity. The US postal service now delivers twice a day. Amazon boxes are dropped off at nearly every door. From holiday parties to gift lists for loved ones, it is a busy time of year as we exchange presents and get ready to usher in 2018. Yet, it is the slowest month of the year for housing.

The active inventory dropped by 8%, 391 homes, in just the past two weeks, the largest drop of the year. From Thanksgiving to New Year’s Day, the average drop since 2013 has been 23%, 1,373 homes. Why does the active inventory drop so dramatically in December? Homeowners instinctively avoid placing their homes on the market this month. Most homeowners want to cash in on “the best time of the year” to sell a home, the Spring Market. As a result, they wait to sell their home. They are only partially right. The Spring Market is the most active time of the year where demand (new pending transactions) reaches a peak for the year, but there is also a surge in new FOR SALE signs, competition. In reality, housing is still hot today for all homes priced below $1 million.

Not only are there fewer homeowners entering the fray in December, many sellers who have been unsuccessful in 2017 opt to throw in the towel and pull their homes off the market. These two combined forces result in an enormous drop in the active inventory.Similarly, demand, the number of pending sales over the prior month, also drops dramatically in December. It dropped by 10%, 232 pending sales, in the past couple of weeks, the largest drop off the year as well. Since 2013, the average drop from Thanksgiving to New Year’s Day has been 34%. There are two forces contributing to this massive drop in December demand. First, there are simply not enough homes on the market and there are fewer and fewer choices every day. Second, many buyers are ready for a holiday break. They are a bit worn out from the scorching hot real estate market and the constant search for their piece of the American Dream. They step aside and enjoy the season.

The bottom line: the holiday lull is here, so set your expectations accordingly.

Active Inventory: The active inventory dropped by 8% over the past couple of weeks.
The active listing inventory shed 391 homes in the past two weeks and now sits at 4,323, the largest drop of the year. Since peaking in mid-July, the inventory has plunged by 1,660 homes, a tremendous 28% drop. The Holiday Market is officially here. Expect the inventory to continue to descend dramatically for the remainder of the year. As a result, the New Year will start with fewer than 4,000 homes, the second lowest inventory behind 2013.Last year at this time, there were 5,177 homes on the market, 854 additional homes, or 20% more than today.Demand:  Demand decreased by 10% in the past couple of weeks.
Yes, the Holiday Market has arrived. In the past two weeks, demand, the number of new escrows over the prior month, decreased by 232 pending sales, or 10%, and now totals 2,082. Like the active inventory, demand just experienced its biggest drop of the year. The decline will continue through the end of the month. By the start of 2018, demand will be at its lowest point in a year.Last year at this time, demand was at 2,116 pending sales, 34 more than today.The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, increased slightly from 61 to 62 days, a slight seller’s market with mild appreciation. Last year’s expected market time was at 73 days.Luxury End:  Luxury demand plunged in the last couple of weeks. 
In the past two weeks, demand for homes above $1.25 million decreased from 299 to 236 pending sales, down 21%. The beginning of the Holiday Market walloped luxury demand. The luxury home inventory decreased from 1,672 homes to 1,585, a 5% drop in the past two-weeks. Expect both the inventory and demand to continue to drop through the end of the year. The expected market time for all homes priced above $1.25 million increased from 168 days to 201.For homes priced between $1.25 million and $1.5 million, the expected market time increased from 112 to 129 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 143 to 169 days. For homes priced between $2 million and $4 million, the expected market time increased from 181 days to 246 days. In addition, for homes priced above $4 million, the expected market time decreased from 466 to 437 days. At 466 days, a seller would be looking at placing their home into escrow around the mid-February 2019.

Orange County Housing Market Summary:
  • The active listing inventory decreased by 391 homes in the past couple of weeks and now totals 4,323, the largest drop of the year. Expect the inventory to drop considerably for the remainder of the year. Last year, there were 5,177 homes on the market, 854 more than today.
  • There are 32% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 9%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.ol’ fashioned sellers with equity.
  • Demand, the number of pending sales over the prior month, plunged by 232 in the past couple of weeks, down 10%, and now totals 2,082. The average pending price is $841,391.
  • The average list price for all of Orange County increased to $1.8 million, a new record. 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 54 days, a hot seller’s market (less than 60 days). This range represents 16% of the active inventory and 19% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 71 days, a slight seller’s market.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 112 days to 129. For homes priced between $1.5 million and $2 million, the expected market time increased from 143 to 169 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 181 days to 246 days. For luxury homes priced above $4 million, the expected market time decreased from 466 to 437 days.
  • The luxury end, all homes above $1.25 million, accounts for 37% of the inventory and only 11% of demand.
  • The expected market time for all homes in Orange County increased slightly from 61 days to 62, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to rise slightly through the end of the year.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 2.3% of demand. There are only 21 foreclosures and 43 short sales available to purchase today in all of Orange County, that’s 64 total distressed homes on the active market, dropping by 4 in the past two weeks. Last year there were 120 total distressed sales, 88% more than today.
  • There were 2,553 closed residential resales in October, down by 1% from October 2016’s 2,575 closed sales. October marked a 7% drop from September 2017, normal for the Autumn Market. The sales to list price ratio was 98.4% for all of Orange County. Foreclosures accounted for just 0.7% of all closed sales and short sales accounted for 1.2%. That means that 98.1% of all sales were good

Orange County Housing Report November 21st, 2017

Orange County Housing Report:

“Not Anytime Soon!”

With an unrelenting lack of supply of homes FOR SALE, it will
not be a buyer’s market anytime soon.

Orange County Housing Report November 21st, 2017

 

Not a Buyer’s Market: Since 2012, the active inventory for Orange County has been extremely limited.

It is time to load the plate with turkey, ham, sweet potatoes, string beans, mashed potatoes, Brussels sprouts, stuffing, and cranberry sauce. Thanksgiving is all about plenty of choices and not enough room on the dinner plate to fit it all. As Americans, we eat more on this day than any other day of the year.

There may be plenty of choices for the Thanksgiving meal, but the Thanksgiving housing market is seriously lacking choices with a razor-thin supply of homes for sale. With only 4,714 homes available to purchase in Orange County, buyers in the lower ranges, homes priced below $750,000, are literally waiting on the sidelines for the next home to come on the market. It is a seller’s market for all homes below $1.25 million (88% of all closed sales in 2017 have been below $1.25 million).

The active listing inventory in Orange County has been leaning in the sellers favor since February 2012. That was not only the beginning of the recovery, it was the beginning of a six-year run in housing. And, housing is poised to continue its run for a seventh year due to a chronically low inventory.

In order for housing to move away from a seller’s market and transition to a balanced market, one that does not favor a buyer or seller, the active inventory must grow beyond 8,000 homes. When it remains above the 8,000 home threshold, housing will eventually transition into a buyer’s market. However, that is not going to occur anytime soon.

 

It occurred for about five months back in 2004, not long enough to move from a balanced market to a buyer’s market. It happened again for a couple of months during the Autumn Market of 2005, one of the first cracks in the housing market that lead up to the Great Recession. The active inventory surpassed 8,000 homes again in January 2006 and remained elevated through September 2009, nearly four consecutive years. Even though the Great Recession started in March 2007, the active inventory signaled throughout 2006 that the market was poised for a change.

The active inventory climbed above the 8,000 mark again in February 2010 and remained elevated through January 2012, an additional two years. From there, it dropped like a rock and housing transitioned seemingly overnight from a buyer’s to a seller’s market. It has been a seller’s market ever since and has only surpassed the 8,000 home threshold for four weeks during the summer of 2014, not long enough for anybody to notice.

The bottom line is this: the 8,000 home mark is a level that establishes which way the market is heading. With an only 4,714 homes on the market today, and dropping, the inventory is nowhere close to that mark. In fact, 2018 is going to start with fewer than 4,000 homes, less than the start to this year. And, this year was defined by its lack of homes for sale, especially below $750,000.

Everybody is wondering, “When will Orange County housing become a buyer’s market?” The answer is, quite simply, “not anytime soon.”

Active Inventory: The active inventory dropped by 3% over the past couple of weeks.
The active listing inventory shed 164 homes in the past two weeks and now sits at 4,714, a 3% drop. Since peaking in mid-July, the inventory has discarded 1,269 homes, a healthy 20% drop. With Thanksgiving this week, housing will transition into the Holiday Market and the inventory will drop like a rock from this week through the end of the year. The New Year will start with fewer than 4,000 homes, the second lowest inventory behind 2013.

Last year at this time, there were 5,655 homes on the market, 941 additional homes, or 20% more than today.

Demand:  Demand decreased by 4% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 95 pending sales, or 4%, in the past two-weeks, and now totals 2,314. With Orange County housing transitioning into the Holiday Market this week, demand will decline and pick up momentum in December. By the start of the New Year, demand will be at its lowest point of the year.

Last year at this time, demand was at 2,339 pending sales, 25 more than today. That is not that big of a difference considering that there are far fewer choices on the market today compared to one year ago.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, remained the same at 61 homes, still on the cusp of a hot seller’s market. Last year’s expected market time was at 73 days.

Luxury End:  Luxury demand fell sharply in the last couple of weeks.
In the past two weeks, demand for homes above $1.25 million decreased from 325 to 299 pending sales, down 8%. Luxury is already transitioning into the Holiday Market. The luxury home inventory decreased from 1,712 homes to 1,672, a 2% drop in the past two-weeks. Expect both the inventory and demand to drop by the end of the year. The expected market time for all homes priced above $1.25 million increased from 158 days to 168.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 100 to 112 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 154 to 143 days. For homes priced between $2 million and $4 million, the expected market time increased from 164 days to 181 days. In addition, for homes priced above $4 million, the expected market time increased from 424 to 466 days. At 466 days, a seller would be looking at placing their home into escrow around the start of March 2019.

 

Orange County Housing Market Summary:

  • The active listing inventory decreased by 164 homes in the past couple of weeks and now totals 4,714. With the start of the Holiday Market this week, the inventory will drop considerably for the remainder of the year. Last year, there were 5,655 homes on the market, 941 more than today.
  • There are 32% 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 95 homes in the past couple of weeks, down 4%, and now totals 2,314. The average pending price is $861,404.
  • The average list price for all of Orange County remained at $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 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 57 days, a hot seller’s market (less than 60 days). This range represents 17% of the active inventory and 18% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 76 days, a seller’s market.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 100 days to 112. For homes priced between $1.5 million and $2 million, the expected market time decreased from 154 to 143 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 164 days to 181 days. For luxury homes priced above $4 million, the expected market time increased from 424 to 466 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 remained at 61 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to rise slightly through the end of the year.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.4% of all listings and 2.1% of demand. There are only 23 foreclosures and 45 short sales available to purchase today in all of Orange County, that’s 68 total distressed homes on the active market, increasing by 10 in the past two weeks. Last year there were 123 total distressed sales, 81% more than today.
  • There were 2,553 closed residential resales in October, down by 1% from October 2016’s 2,575 closed sales. October marked a 7% drop from September 2017, normal for the Autumn Market. The sales to list price ratio was 98.4% for all of Orange County. Foreclosures accounted for just 0.7% of all closed sales and short sales accounted for 1.2%. That means that 98.1% of all sales were good ol’ fashioned sellers with equity.

 

 

 

 

 

 

Orange County Housing Report November 7th, 2017

Orange County Housing Report:

“Hot in November?!?!”

With such limited supply, this is the hottest November housing
market in years.

Orange County Housing Report November 7th, 2017

 

Hot November Housing: With an expected market time of just 61 days, the Orange County housing market is still firing on all cylinders.

Buyers cannot get a break from the relentlessly hot housing market in Orange County. For homes priced below $1 million, there are simply not enough homes to satisfy the sea of buyers attempting to purchase. Moreover, November 2017 is exceptionally hot for this time of the year.

Just because Starbucks now has festive cups and holiday commercials monopolize the airwaves does not mean that the housing market slows. In fact, during this time of the year, if a home is priced right and in great condition, it will procure multiple offers, often times selling for above its list price. This will continue through Thanksgiving when the market transitions to the slower Holiday/Winter Market.

What is really at play here is that there are plenty of buyers who still want to purchase, yet fewer homes are coming on the market and many homeowners who have been on the market for quite some time are giving up and throwing in the towel in anticipation of the slower holiday season. The active listing inventory drops like a rock and demand remains steady. With a dropping supply and steady demand, the expected market time dips, and the market gets hotter.

 

Within the last couple of weeks, the expected market time dropped from 65 days to 61. Housing is actually getting stronger. It typically does from October through mid-November. The difference this year is that the market was already hot and somebody just turned up the heat.

Within the past couple of weeks, the active inventory shed 6%, dropping by 337 homes, the largest drop so far this year. On the other hand, demand, the number of new pending sales over the prior month, increased by 16, or 1%. That is precisely why the expected market time plunged from 65 to 61 days in such a short period. The supply of homes dropped and demand increased. At 61 days, this is the hottest the market has been in November since 2012, the beginning of the housing recovery.

Buyers are feeling the pinch too, as the number of homes on the market is evaporating before their very eyes. For the sellers that do remain, open houses are still packed, there are plenty of showings, and attractively priced homes in great condition are entertaining offers within hours of installing the FOR SALE sign in their yards. It is frustrating to be a buyer and glorious to be a seller.

In spite of the fact that Thanksgiving is just a couple of weeks away, November 2017 is going to be very hot for housing.

Tax Reform and Its Impact on Housing: California is going to be hit hard by the proposed tax reform. 

Many are asking how the proposed tax reform is going to affect the housing market right here in Orange County. Here’s how it will impact real estate:

  • Lowers the mortgage interest deduction cap from $1 million to $500,000 (on all new purchases)
  • Eliminates the mortgage interest deduction on second homes
  • Homeowners would no longer be able to deduct the interest on home equity loans
  • Eliminates state and local income tax deductions
  • Caps property tax deductions at $10,000
  • Extends the qualification period for exclusion of capital gains tax on the sale of a primary home from two out of the last five years to five out of the last eight years

Remember, at this point this is just a proposal from the House Ways and Means Committee. However, the House is attempting to pass a tax reform bill by Thanksgiving in order for it to move its way through the Senate and onto President Trump’s desk for signing by year’s end.

The tax proposal would hurt homeownership and remove incentives for buyers to purchase. Its impact would be significant and has the potential to shake up the housing industry especially in California and Orange County where the median sales price is much higher than the rest of the country.

Active Inventory: The active inventory dropped by 6% over the past couple of weeks.

The active listing inventory shed 337 homes in the past two weeks and now sits at 4,878, a 6% drop. It is the largest drop so far this year, bringing the inventory to the lowest level since March. The inventory will continue to drop through the end of the year, which will result in a start to the New Year with less than 4,000 homes, the second lowest inventory behind 2013. On January 1, 2013, there were only 3,249 homes on the market. This year started with 4,071 homes.

Last year at this time, there were 5,955 homes on the market, 1,077 additional homes, or 22% 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 16 pending sales, or 1%, in the past two-weeks, and now totals 2,409. Demand will remain close to this level for the next month before it starts its seasonal drop from Thanksgiving week through the end of 2017.

Last year at this time, demand was at 2,468 pending sales, 59 more than today. That is not that big of a difference considering that there are far fewer choices on the market today compared to one year ago.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, dropped from 65 to 61 days, on the cusp of a hot seller’s market. Last year’s expected market time was at 72 days.

Luxury End:  Luxury supply plummets while demand rises.

In the past two weeks, demand for homes above $1.25 million increased from 302 to 325 pending sales, up 8%. That is a solid improvement and a clear indicator that the luxury market is making its final push to close out the year strong. The luxury home inventory decreased from 1,818 homes to 1,712, a 6% drop in the past two-weeks. The luxury inventory will continue to drop through the end of the year. Since demand increased and the inventory dropped, the expected market time for all homes priced above $1.25 million dropped from 181 days to 158.

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 111 to 100 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 173 to 154 days. For homes priced between $2 million and $4 million, the expected market time dropped from 218 days to 164 days. In addition, for homes priced above $4 million, the expected market time increased from 326 to 424 days. At 424 days, a seller would be looking at placing their home into escrow around the start of January 2019.

 

Orange County Housing Market Summary:

  • The active listing inventory decreased by 337 homes in the past couple of weeks, the largest drop of the year, and now totals 4,878. The trend is down for the remainder of the year. Last year, there were 5,955 homes on the market, 1,077 more than today.
  • There are 36% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 16%. 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 16 homes in the past couple of weeks, up 1%, and now totals 2,409. The average pending price is $879,146.
  • The average list price for all of Orange County remained at $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 40 days. This range represents 40% of the active inventory and 61% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 51 days, a hot seller’s market (less than 60 days). This range represents 17% of the active inventory and 20% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 85 days, an extremely slight seller’s market with very slow appreciation.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 111 days to 100. For homes priced between $1.5 million and $2 million, the expected market time decreased from 173 to 154 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 218 days to 164 days. For luxury homes priced above $4 million, the expected market time increased from 326 to 424 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 decreased in the past couple of weeks from 65 days to 61 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to remain relatively flat, rising slightly by year’s end.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.2% of all listings and 2.3% of demand. There are only 20 foreclosures and 38 short sales available to purchase today in all of Orange County, that’s 58 total distressed homes on the active market, decreasing by 9 in the past two weeks. Last year there were 133 total distressed sales, 129% more than today.
  • There were 2,543 closed residential resales in October, down by 1% from October 2016’s 2,575 closed sales. October marked a 7% drop from September 2017, normal for the Autumn Market. The sales to list price ratio was 98.2% for all of Orange County. Foreclosures accounted for just 0.7% of all closed sales and short sales accounted for 1.2%. That means that 98.1% of all sales were good ol’ fashioned sellers with equity.

 

 

 

 

 

Orange County Housing Report October 24th, 2017

Orange County Housing Report:

“Running Out of Time”

The window of opportunity is closing for sellers to find success
in 2017.

Orange County Housing Report October 24th, 2017

 

Last Call for 2017: Four more weeks until the slowest season of the year starts for housing.

Pass the turkey! It is right around the corner… cranberry sauce, gravy, stuffing, mashed potatoes, cornbread, glazed carrots, green beans, pumpkin pie, honey baked ham, and, of course, plenty of turkey. Thanksgiving is a little over a month away. There are plenty of signs that the holiday season is right around the corner. The days are getting shorter. Professional installers are already putting up holiday lights on homes and businesses. Stores are gearing up for their busiest time of the year.

The weekend prior to Thanksgiving is the LAST HURRAH before the housing market transitions from the Autumn Market to the Holiday/Winter Market. From there, real estate activity takes a back seat to the all of the distractions of the holidays. Demand comes to a crawl, dropping by about 25% from where it is today. The active inventory drops considerably, shedding about 25% as well. Fewer and fewer homeowners will opt to sell and many unsuccessful sellers will throw in the towel and pull their homes off the market, choosing to wait until the much more active spring selling season.

There will still be plenty of new escrows opened prior to transitioning into the season of yuletide greetings, but that window of opportunity will close fast. Before you know it, real estate will take a back seat to holiday decorations, shopping, company parties, and family gatherings.

Many REALTORS® assert that they are busy during the month of December. There typically is an uptick in closed sales in comparing December to November numbers. This uptick is due to a slight surge in new pending sales from now through Thanksgiving. Those pending sales close during the month of December.

While there may be more closed sales in December, the number of new pending sales, demand, drops like a rock. Demand drops dramatically from mid-November until it bottoms with the start to the New Year. The market typically does not shake off the effects of the holidays until around the third week of January. It will not be until the end of January when Orange County housing will start to rev its massive engine and demand will rise considerably. As a result, January and February are cyclically the slowest months of the year in terms of closed sales.

The active inventory will drop from now through the end of the year and will pick up steam from Thanksgiving week on. It too will reach a bottom on January 1st. Typically, the inventory does not really start to build until the beginning of March. With so few homes on the market today, the start to 2018 is expected to be extremely anemic.

WARNING to Buyers: Contrary to want many think, the holidays are NOT a time when sellers are suddenly desperate; as a result, you will not get a “deal.” There are not enough homes on the market to begin with. The few that do remain will not be giving away the farm to make something happen just because it is the holidays.

WARNING to Sellers: You are running out of time before the market slows significantly and your chances of success drop.

Active Inventory: The active inventory dropped by 3% over the past couple of weeks.

The active listing inventory shed 167 homes in the past two weeks and now sits at 5,215, the lowest level since the start of April. The theme for the 2017 housing market has been “a serious lack of FOR SALE signs.” Unfortunately, it is not going to get any better any time soon. The active inventory will continue to drop for the remainder of the year.

Last year at this time, there were 6,337 homes on the market, 1,122 additional homes, or 22% more than today.

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

Demand, the number of homes placed into escrow within the prior month, decreased by 33 pending sales, or 1%, in the past two-weeks, and now totals 2,393. It is the lowest level since the start of January of this year. Demand will remain close to this level for the next month before it starts its seasonal drop from Thanksgiving week through the end of 2017.

Last year at this time, demand was at 2,480 pending sales, 87 more than today. Part of the difference is due to significantly fewer homes available to purchase today compared to last year.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, dropped from 67 to 65 days, a slight seller’s market where housing still tilts in the sellers favor and appreciation slows. Last year’s expected market time was at 77 days.

Luxury End:  Luxury supply plummets while demand remains the same.

In the past two weeks, demand for homes above $1.25 million dropped from 303 to 302 pending sales. That is solid, indicating that the luxury market will most likely remain stable from now through Thanksgiving similar to the lower price ranges. The luxury home inventory decreased from 1,887 homes to 1,818, a 4% drop, in the past two-weeks. The luxury inventory will continue to drop through the end of the year. Since demand really did not change and the inventory dropped, the expected market time for all homes priced above $1.25 million dropped from 187 days to 181.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 101 to 111 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 178 to 173 days. For homes priced between $2 million and $4 million, the expected market time dropped from 280 days to 218 days. In addition, for homes priced above $4 million, the expected market time increased from 316 to 326 days. At 326 days, a seller would be looking at placing their home into escrow around mid-September of 2018.

Orange County Housing Market Summary:

  • The active listing inventory decreased by 167 homes in the past couple of weeks, and now totals 5,215. The trend is down for the remainder of the year. Last year, there were 6,337 homes on the market, 1,122 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 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 33 homes in the past couple of weeks, down 1%, and now totals 2,393. The average pending price is $872,219.
  • The average list price for all of Orange County remained at $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 43 days. This range represents 40% of the active inventory and 61% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 55 days, a hot seller’s market (less than 60 days). This range represents 17% of the active inventory and 20% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 88 days, an extremely slight seller’s market with very slow appreciation.
  • For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 101 days to 111. For homes priced between $1.5 million and $2 million, the expected market time decreased from 178 to 173 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 280 days to 218 days. For luxury homes priced above $4 million, the expected market time increased from 316 to 326 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 decreased in the past couple of weeks from 67 days to 65 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 final month of the Autumn Market.
  • Distressed homes, both short sales and foreclosures combined, make up only 1.3% of all listings and 2.5% of demand. There are only 27 foreclosures and 40 short sales available to purchase today in all of Orange County, that’s 67 total distressed homes on the active market, decreasing by 14 in the past two weeks. Last year there were 133 total distressed sales, 99% more than today.
  • There were 2,746 closed residential resales in September, nearly identical to the 2,736 closed sales in September 2016. September marked a 12% drop from August 2017, part of a normal autumn housing transition. The sales to list price ratio was 98% for all of Orange County. Foreclosures accounted for just 0.6% of all closed sales and short sales accounted for 0.9%. That means that 98.5% of all sales were good ol’ fashioned sellers with equity.

 

 

 

 

 

 

 

 

 

Orange County Housing Report October 11th, 2017

Orange County Housing Report:

“I’m Going to Wait to Buy”

Many potential buyers are unaware that there is a significant cost in waiting to purchase.

Orange County Housing Report October 11th, 2017

 

Cost of Waiting: Today’s 3.85% interest rate is a gift in historical context.
There have not been enough homes on the market for over five years now. This trend has been reinforced in 2017 with 7% fewer FOR SALE signs compared to last year. Buyers have been tripping over each other in search of their piece of the “American Dream.” The lower the price range, the harder it has been to secure a home.

It has been difficult and frustrating to be a buyer, and that has not changed in years; and, it is not going to change in 2018 either. It is easy to empathize with buyers, especially those with smaller down payments. Buyers cannot help but fall in love with a home, write an offer, and then find out that they are one of ten buyers bidding on the same home. They have a 10% chance of being the winning bidder. They are instructed not to fall in love with a home until they are the winning bid. That is easier said than done. Buyers are human beings. They write offers to purchase a home because it is a good fit for their family. They visualize how their furniture will be situated in their potential new home. They visualize where they will entertain the extended family on the 4th of July and Thanksgiving. They visualize life. How are they supposed to strip the process of finding a home from all of their emotions?

Most buyers have been busy writing offer after offer, falling in love with home after home. The process can be grueling and exhausting. It does not mean that it cannot be done; it is just not going to be easy by any stretch of the imagination. Tapping out is not the answer. As frustrating as the process has been, it is not going to improve anytime soon. Taking a short break is understandable, but buyers really need to talk themselves out of saying, “I’m going to wait to buy.”

What exactly are they waiting for? The inventory of homes is not forecasted to significantly rise for a very long time. Buyers will be facing limited choices for the long haul unless they are looking for homes in the luxury end. There are plenty of choices above $1.5 million, but that is simply not the typical buyer. The only reason there are more choices for luxury housing is that there are fewer buyers that can afford the high sticker prices. For the rest of the market, there are not enough options to purchase and demand is red hot.

So, what happens to buyers that do wait?  The biggest risk is the eventual rise in interest rates. It seems that the experts and prognosticators have been calling for a rise in interest rates for a few years running; yet, the increases have yet to materialize. Everybody needs to understand that it took quite a bit of manipulation by central banks around the world to get rates down to these unbelievable levels. Rates will not drop further. Instead, as the central banks, starting with the U.S. Federal Reserve, reverse course on their monetary policies, rates will become more volatile and will begin to rise.

Will rates remain low for the coming year? It is quite likely; however, “don’t look a gift horse in the mouth.” This interest rate environment is a total gift from international central banks and our Federal Reserve. It will not be around forever.

Down the road, many will look back at these interest rates and wish they had pulled the trigger and locked in for the long haul. When interest rates rise just 1% from where they are today, a $500,000 mortgage will cost an additional $297 per month or $3,564 per year. For a $750,000 mortgage, a buyer is looking at paying an additional $445 per month or $5,340 per year. Over a five-year period the increase accumulates to $26,700; and, over the 30-year life of the loan, the homeowner will have paid an additional $160,020.

It seems that everybody has become quite accustomed to today’s low rates. For context, the 30-year fixed rate peaked at over 18% back in 1981 and it has been trending down ever since. In 1990, rates were at 10%. In 1980, it was 8%. Just prior to the Great Recession, mortgage rates had fallen to 6.35%. After tremendous manipulation by the Federal Reserve, rates dropped all the way down to 3.35% by the end of 2012, fueling the bonanza in housing that everybody is feeling today. Rates have hit a bottom and are only expected to rise from here. It’s not a matter of IF they rise; it’s more a matter of WHEN.

For buyers, it is not wise to gamble on rates. They are low today and the Orange County housing market is expected to continue to appreciate through 2018. The longer a buyer waits, the higher the mortgage payment will be down the road.

Active Inventory: The active inventory dropped by 2% over the past couple of weeks.
The active listing inventory shed 111 homes in the past two weeks and now sits at 5,382. There really are not that many homes on the market compared to the last few years. Only in 2012 were there fewer homes on the market to start October. The active inventory will continue to fall 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 6,472 homes on the market, 1,090 additional homes, or 20% more than today.

Demand:  Demand decreased by 4% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 94 pending sales, or 4%, in the past two-weeks, and now totals 2,426. Part of this drop is seasonal. Demand tends to drop a bit during the Autumn Market with both the Spring and Summer Markets in the rearview mirror. Additionally, fewer homes are coming on the market compared to the last few years for this time of year as well. Within the last month, 7% fewer FOR SALE signs have been placed in homeowners’ yards compared to 2016. With fewer choices, the number of pending sales has taken a hit.

Last year at this time, demand was at 2,693 pending sales, 267 more than today, or 11% higher.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, rose from 65 to 67 days, a slight seller’s market where housing still tilts in the sellers’ favor and appreciation slows. Last year’s expected market time was at 72 days at the beginning of October.

Luxury End:  Luxury supply and luxury demand dropped in the past couple of weeks.
In the past two weeks, demand for homes above $1.25 million decreased from 318 to 303 pending sales, a 5% drop. Since reaching 385 at the end of August, demand has dropped by 21%, representing a major shift in the Autumn Luxury Market. The luxury home inventory decreased from 1,959 homes to 1,887, a 4% drop, in the past two-weeks. As a result, the expected market time for all homes priced above $1.25 million slowed slightly from 185 days to 187. Luxury inventory and luxury 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 increased from 99 to 101 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 169 to 178 days. For homes priced between $2 million and $4 million, the expected market time increased from 264 days to 280 days. In addition, for homes priced above $4 million, the expected market time decreased from 424 to 316 days. At 316 days, a seller would be looking at placing their home into escrow around the end of August of 2018.

Orange County Housing Market Summary:

  • The active listing inventory decreased by 111 homes in the past couple of weeks and now totals 5,382. The trend is down for the remainder of the year. Last year, there were 6,472 homes on the market, 1,090 more than today.
  • There are 37% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 27%. 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 94 homes in the past couple of weeks, down 4%, and now totals 2,426. The average pending price is $870,430.
  • The average list price for all of Orange County remained at $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 62% 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 17% of the active inventory and 20% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 95 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 increased from 99 days to 101. For homes priced between $1.5 million and $2 million, the expected market time increased from 169 to 178 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 264 days to 280 days. For luxury homes priced above $4 million, the expected market time decreased from 424 to 316 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 in the past couple of weeks from 65 days to 67 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% of demand. There are only 34 foreclosures and 47 short sales available to purchase today in all of Orange County, that’s 81 total distressed homes on the active market, decreasing by 7 in the past two weeks. Last year there were 128 total distressed sales, 58% more than today.
  • There were 2,733 closed residential resales in September, nearly identical to the 2,736 closed sales in September 2016. September marked a 12% drop over August 2017, part of a normal autumn housing transition. The sales to list price ratio was 98.1% for all of Orange County. Foreclosures accounted for just 0.6% of all closed sales and short sales accounted for 0.9%. That means that 98.5% of all sales were good ol’ fashioned sellers with equity.

Orange County Housing Report September 26th, 2017

Orange County Housing Report: My Home’s Not Selling!!!

Even though the housing market is hot, there are plenty of homes that are sitting with no success.

 

Orange County Housing Report September 26th, 2017

 

Sitting on the Market: 43% of the active listing inventory has been on the market for over two months.

The excitement is in the air. A homeowner sits across from a REALTOR® and signs all of the contracts. Their home is officially on the market. With eager anticipation, they clean their home from top to bottom and turn on all of the lights; the first potential buyer is coming to look. After the buyer tours the home, the sellers return and wonder whether the buyers liked it enough to bring an offer. After all, the market is incredibly hot, right? Yet, there is no offer. Showing after showing, day after day, week after week, there are no offers. Moreover, the number of showings has trickled down to only a couple per week after three months of market exposure. What is going on?

Everybody has been talking about how Orange County housing has been red-hot; however, many sellers are not finding success. An incredible 43% of all homes that are on the active listing inventory have been exposed to the market for more than two months. Of course, this is standard for luxury real estate, but there are plenty of homes in the lower ranges having trouble as well.  Nearly a third of all homes priced below $750,000 have been FOR SALE for more than two months and are still waiting for the right buyer to bring a mutually acceptable offer to purchase. For homes priced between $750,000 and $1 million, it grows to 36%; the higher the price, the harder it is to sell.

 

What gives? If housing is so unbelievably hot, why are many sellers struggling to hit pay dirt? Of course, most everybody immediately thinks it is the price. In most cases, that is only part of the issue.

Buyers are human. They like to purchase new. They prefer a home that is truly “turnkey” where all they have to do is move in. The reality is there is not enough brand new product in Orange County. Yet, even brand new is not turnkey. They have to decide on upgrades through the builder, and, after the closing, they have to purchase and install window coverings and design and complete all of the landscaping. There is a lot of effort that goes into a new home purchase.

All of the HGTV programs, from Flip or Flop to Property Brothers, have helped create an expectation and desire for buyers to purchase homes that look like a model. As long as the price is right, the closer a home looks to model perfect with all of the bells and whistles, the faster the home will fly off the market. Unfortunately, not every home shows like a model.

Many homes are dated. If a home has a kitchen that is more than 10 years old, it is starting to look worn and dated. If the grass has brown patches and the planters are sprouting weeds, the yard is looking worn and dated. Vinyl flooring, popcorn ceilings, stained carpet, single-paned windows, scuffed walls, aluminum blinds, ceramic tile in the kitchen, original bathroom hardware, water stained cabinets, etcetera, all contribute to a home feeling used and worn. Throw in a pet with all of the odors, hair, and damage, and it is no wonder that sellers are having a hard time selling.

Many investors have flipped homes for a profit. How do they do this? They do this by purchasing a home for a low price that needs quite a bit of work, and then fixing it up and selling it for much more, making a handsome profit. They install new granite counters, flooring, paint, light fixtures, cabinets, scrape popcorn ceilings, and install new sod, plants, flowers, and mulch. Basically, they make a residential resale look and feel like a model. A little professional staging and the investor is able to make a healthy profit.

In order to compete and fetch top dollar, a good ol’ fashioned homeowner who has lived in their home for years must invest in their home by approaching selling like a flipper. They too can make their home look like a model. Taking care of deferred maintenance will afford buyers the ability to visualize moving in right away. They will not have to address cosmetic issues after closing. Buyers are willing to pay a premium for homes that are turnkey and look like a model. The sellers will net more money by addressing the deferred maintenance and their home will fly off the market.

If a seller does not address the deferred maintenance, then the price must be adjusted accordingly. Buyers subtract a lot more than it costs to take care of any deferred maintenance, which ultimately nets the seller less money in the sale of their home.

WARNING TO SELLERS: price is the most important factor in successfully selling. Overprice in a hot seller’s market, and you still won’t sell. Instead, you will waste valuable market time. Success takes into consideration price, condition, and location. Sellers are able to control both the price and condition in order to achieve their goal in selling.

Active Inventory: The active inventory dropped by 3% over the past couple of weeks.
The active listing inventory shed 146 homes in the past two weeks and now sits at 5,493. The inventory has not been this low since the start of May; and, for this time of the year, the start of autumn, it has not been this low since 2012. The active inventory 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 6,786 homes on the market, 1,293 additional homes or 24% more than today.

 

Demand:  Demand decreased by 4% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 104 pending sales, or 4%, in the past two-weeks and now totals 2,520. The Orange County housing market is experiencing a higher than the normal drop for this time of the year because of a serious lack of homes coming on the market right now. Within the last month, 10% fewer homes have come on the market this year compared to 2016. Fewer available homes are cutting into the number of potential pending sales, which is affecting demand.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, rose from 64 to 65 days, a slight seller’s market where housing still tilts in the sellers’ favor and appreciation slows. Last year’s expected market time was 72 days at the end of September.

Last year at this time, demand was at 2,812 pending sales, 292 more than today, or 12% higher.

Luxury End:  Luxury demand tumbled by 11% in the past couple of weeks, while the inventory dropped by only 1%.
In the past two weeks, demand for homes above $1.25 million decreased from 358 to 318 pending sales, an 11% drop, representing a major shift in the luxury market. The luxury home inventory decreased from 1,979 homes to 1,959, a 1% drop. As a result, the expected market time for all homes priced above $1.25 million increased from 166 days to 185 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 increased from 90 to 99 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 171 to 169 days. For homes priced between $2 million and $4 million, the expected market time increased from 198 days to 264 days. In addition, for homes priced above $4 million, the expected market time decreased from 460 to 424 days. At 424 days, a seller would be looking at placing their home into escrow around Thanksgiving of next year.

 



Orange County Housing Market Summary:

  • The active listing inventory decreased by 146 homes in the past couple of weeks and now totals 5,493. The trend is down for the remainder of the year. Last year, there were 6,786 homes on the market, 1,293 more than today.
  • There are 43% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 28%. 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 104 homes in the past couple of weeks, down 4%, and now totals 2,825. The average pending price is $847,650.
  • The average list price for all of Orange County remained at $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 41 days. This range represents 38% of the active inventory and 62% 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 97 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 increased from 93 days to 99. For homes priced between $1.5 million and $2 million, the expected market time decreased from 171 to 169 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 185 days to 264 days. For luxury homes priced above $4 million, the expected market time decreased from 460 to 424 days.
  • The luxury end, all homes above $1.25 million, accounts for 36% of the inventory and only 12% of demand.
  • The expected market time for all homes in Orange County increased in the past couple of weeks from 64 days to 65 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 1.6% of all listings and 2.1% of demand. There are only 35 foreclosures and 53 short sales available to purchase today in all of Orange County, that’s 88 total distressed homes on the active market, increasing by 1 in the past two weeks. Last year there were 120 total distressed sales, 36% more than today.
  • There were 3,116 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% 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.