Orange County Housing Report: Surf’s Up!!!
For sellers, the conditions are perfect and there is no need to wait until the Spring Market to sell.
Read more in this Orange County Housing Report for January 30th, 2017.
Living in Southern California, “surf’s up” is a phrase used to describe when the waves at the beach are worth surfing. In describing the Orange County housing market and whether or not right now is a good time to sell a home, yes, “surf’s up!” If you are a homeowner who wants to sell, but you are waiting for the “Spring Market” because that’s when the conditions are “the best” for selling a home, there’s actually no need to wait. So, grab your surfboard, contact a professional REALTOR®, jump in the water, and start paddling to the swells… Surf’s Up!
After a slow start to housing due to very few homeowners placing their homes on the market at the beginning of the month, everything that is coming on the market now is flying off the market almost as quick as the “FOR SALE” sign is placed in the front yard. The only complaint in the real estate trenches is that there are simply not enough homes on the market right now.
Everything priced below $1.5 million is experiencing a HOT market, and it’s scorching below $750,000. The market run has officially hit the five-year mark, and this is the second best start behind the blazing hot 2013 market. Why are the conditions so favorable compared to the last few years? Current demand is extremely strong and the active inventory is at exceptionally anemic levels. Compared to last year, there are 11% fewer homes on the market right now, and 19% fewer than 2015; yet, demand (new pending sales over the prior month) is almost identical to 2016. And, today’s demand has been muffled with fewer homes coming on the market so far this year.
The expected market time (the time it would take to list a home today and then place it into escrow) dropped from 84 days two weeks ago to 67 days today. This is because the supply of homes actually dropped slightly while demand, new pending sales, exploded.
The only thing keeping demand from being even higher today is the lack of inventory. Sellers who are opting to sell now, versus waiting until later in the spring, are totally taking advantage of a market ripe for the pickings. As long as a home is priced closed to its Fair Market Value and is in good condition, it will fly off the market with multiple offers. Carefully pricing will result in selling at, or even higher, than the asking price. Stretching the price too much will result in wasting the most valuable market time, the first few weeks after coming on the market.
For those opting to “wait until the spring,” there will undoubtedly be more buyers looking to purchase, but there will also be an enormous increase in the number of sellers. With increased demand comes increased supply. Who knows what the market will be like in 90-days. With the new presidential administration, it is hard to predict where housing will be a few months from now. One thing is 100% certain, right now the conditions are perfect for selling. Cowabunga dude, surf’s up!!!
Active Inventory: Due to a spike in demand and fewer homes coming on the market, the inventory actually dropped a bit in the past two weeks.
Since January 1st, there have been 6% fewer homes that were placed on the market compared to last year at this time. Remarkably, there were 7% fewer homes last year compared to 2015. So, this year there are even more homeowners who are opting not to sell even though the conditions are perfect.
In the past two weeks, the active listing inventory has shed 56 homes, or 1%, and now totals 4,320. This is typically the time of year when more homes are finally coming on the market. The holidays are officially way behind us; it is time to for homeowners to shake off the holiday buzz and not opt to wait until the Spring Market, taking advantage of current wave of pent up demand. The lack of new sellers hitting the market could be due to a “wait and see” attitude regarding the new Trump administration. Regardless, there will be a significant increase in supply in February. Stay tuned…
Last year at this time there were 4,841 homes on the market, 12% more. Two years ago there were 1,011 more homes on the market, or 23% more.
Demand: Demand skyrocketed in the past couple of weeks.
As is typical for this time of the year, buyers are chomping at the bit and are eager to move on from the doldrums of the Holiday Market that brings very few choices and not a lot of fresh inventory. Buyers know that is about to change, even though it has been slow going for January.
Demand, the number of homes placed into escrow within the prior month, increased by 368 pending sales in the past couple of weeks, or 24%, and now totals 1,930. Finally, the resilient Orange County housing engine is revving its supercharged engine and will continue to skyrocket as more inventory hits the market.
Last year at this time there were 6 more pending sales compared to today, totaling 1,936. The big difference this year, the near identical demand is being done with fewer homes on the market.
Luxury End: Demand is way up, while the luxury inventory is only up slightly.
Demand is up for Orange County’s luxury home market with 46 additional pending sales compared to last year at this time; however, there is more competition. The luxury inventory is up by 65 homes. That extra competition translates to more seller who are not successful on a monthly basis. Also, a lot of the luxury activity is taking place within the $1 million to $1.5 million price range.
For homes priced between $1 million to $1.5 million, the inventory is down by 26 homes compared to last year, and demand is up by 33 pending sales. Yet, above $1.5 million, the inventory is up by 91 homes, and demand is up by only 13.
In the past two weeks, demand for homes above $1 million increased from 245 to 325 pending sales, a 33% rise, its highest level since mid-December. The luxury home inventory increased from 1,705 homes to 1,744, its highest level since mid-December as well. The expected market time decreased in the past couple of weeks from 209 to 165 days.
For homes priced between $1 million to $1.5 million, the expected market time in the past couple of weeks decreased from 147 days to 98 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 169 to 195 days. For homes priced above $2 million, the expected market time dropped from 370 days to 277 days. At 277 days, a seller would be looking at placing their home in escrow around the beginning of November.
Orange County Housing Market Summary:
- The active listing inventory dropped by 56 homes in the past couple of weeks, a 1% drop, and now totals 4,320. The drop was unprecedented for this time of the year and is most likely due to fewer homes coming on the market so far in 2017, down 6% from last year. The inventory should increase from here, peaking sometime during the summer.
- There are 32% fewer homes on the market below $500,000 compared to last year at this time and demand is down by 16%. Fewer and fewer homes and condominiums can now be found priced below $500,000. It is the price range that is slowly disappearing.
- Demand, the number of pending sales over the prior month, skyrocketed by 24% in the past couple of weeks, adding an additional 368 and now totals 1,930. Today’s demand is almost identical to last year when there were just 6 additional pending sales. The average pending price is $871,107.
- The average list price for all of Orange County is $1.6 million, identical to two weeks ago. This number is so high due to the mix of homes in the luxury ranges that sit on the market.
- For homes priced below $750,000, the market is HOT with an expected market time of just 42 days. This range represents 42% of the active inventory and 67% of demand.
- For homes priced between $750,000 and $1 million, the expected market time is 73 days, a slight seller’s market (between 60 and 90 days). This range represents 18% of the active inventory and 16% of demand.
- For luxury homes priced between $1 million to $1.5 million, the expected market time is at 98 days, dropping by 49 in the past couple of weeks. For homes priced between $1.5 million to $2 million, the expected market time increased from 169 to 195 days. For luxury homes priced above $2 million, the expected market time decreased from 370 to 277 days.
- The luxury end, all homes above $1 million, accounts for 40% of the inventory and only 17% of demand.
- The expected market time for all homes in Orange County drastically dropped in the past couple of weeks from 84 to 67, a slight seller’s market (between 60 and 90 days).
- Distressed homes, both short sales and foreclosures combined, make up only 2.1% of all listings and 3.9% of demand. There are 38 foreclosures and 53 short sales available to purchase today in all of Orange County, that’s 91 total distressed homes on the active market, 21 fewer than two weeks ago and the lowest total since prior to the Great Recession. Last year there were 159 total distressed sales, 74% more.
- There were 2,474 closed sales in December, a 1% increase from November, and nearly identical to the 2,746 sales that closed in December 2015. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 1.25% of all closed sales and short sales accounted for 1.25% as well. That means that 97.5% of all sales were good ol’ fashioned equity sellers.