Sellers have until the end of July to get their homes into escrow, indicating that the price better be right.
Pricing: Expired listings are up 64% so far in 2019, illustrating how crucial pricing is this year to avoid becoming another statistic.
Spring is in the air and so are the community garage sales. There is a real strategy behind a successful garage sale. For
the amateur trying to overcapitalize on their used possessions, they often overprice and miss the opportunity to cash in on
the most optimal time of the sale, the first two hours. Everybody seemingly gets sucked into the emotions behind their
personal belongings. This emotional attachment leads to asking way too much. After a steady stream of uninterested
buyers because of the quoted price, the amateur salesperson lowers it. Yet, the wave of initial buyers has already passed,
and the steady stream diminishes to a trickle. Desperate to sale, the price is lowered yet again, attempting to avoid carting
everything back to the garage and attic.
This scenario plays out over and over again on the housing front as well. Sellers frequently ignore their professional
REALTOR® and price a home arbitrarily based upon emotion, or what they need out of a home in order to move on. It is
challenging to see all of the deferred maintenance, lack of upgrades, an inferior location, or a small lot size, when a seller
is living LIFE in it. Home is where the children are raised. First steps, first time riding a bike, first tooth for the Tooth Fairy,
first day of school, first dance, there are a lot of “firsts” in a home, a collection of memories that tug at our heartstrings.
Ignoring the expert on pricing advice is understandable, but unfortunate. The best advice is to lean into their years of
experience and understanding of current market conditions, trends, and pricing strategies. The emotions behind pricing
must be removed to find success. A buyer’s lens is much different. They do not want to inherit deferred maintenance.
They want to see upgrades. The location and lot size are important considerations. Most importantly, buyers are not
willing to overpay for a home, especially in 2019.
The active listing inventory is at its highest level since 2011. There are 29% more homes on the market compared to last
year. With more inventory, the number of unsuccessful sellers is escalating. So far this year, there have been 3,455
expired listings, up 64% compared to last year. Based upon the number of closed sales through April, 30% of homes that
were marketed did not find success. At this time last year, it was only 17%.
The chances of finding success has dropped substantially. Pricing a home accurately is more important today than in
years. This is not the Spring Markets of 2012 through 2018. The average Expected Market Time (the time from the initial
FOR SALE sign to opening escrow) during those years was 56 days. It is at 84 days today, nearly a month longer. The
Expected Market Time is a factor of both supply and demand. There is a lot more seller competition with the extra supply;
and, demand is muted as well. Demand (number of pending sales in the prior 30-days) is down 14% compared to the last
How should sellers approach the housing market? The best approach is to be sure to lean into the expert, the real
estate professional, and price a home according to its Fair Market Value. This is determined by condition, upgrades, and
location. The REALTOR® will be able to pull their emotion out of a home and objectively arrive at the price that will result
in a sale. The second step is to be patient. This housing market is no longer instantaneous. Finally, after being exposed to
the market for a while and receiving objective feedback directly from buyers, do not be afraid to make some adjustments
in condition and price.
How should buyers approach the housing market? Remember, it is NOT a Buyer’s Market. It is not even a Balanced
Market. Currently, it is a slight Seller’s Market. That means that when a home is accurately priced, it will generate buyers’ interest.
On average, homes are selling within 2% of their asking price. Lowball offers will only result in wasting
everyone’s time. Jump on homes that match your specified criteria and are priced according to their Fair Market Value.
Active Inventory: In the past couple of weeks, the active inventory surpassed last year’s peak and will continue to climb
In the past two weeks, the active listing inventory increased by 228 homes, up 3%, and now totals 7,413, surpassing last
year’s peak of 7,292. That’s the highest level since September 2014. It will continue to climb until peaking sometime this
summer, most likely mid-August. By then the inventory will reach its highest level since 2011. That would be a lot more
seller competition and a much slower market than today.
Last year at this time there were 5,730 homes on the market. That means that there are 29% more homes available
today. This is the highest level of homes on the market for this time of the year since 2011.
Demand: In the past couple of weeks, demand was nearly unchanged.
Demand, the number of new pending sales over the prior month, increased by 2 pending sales in the past two weeks,
nearly unchanged, and now totals 2,655. After an initial slow start to the year, demand surged from February through
April. In May, it slightly came off of those highs and most likely peaked early for 2019. Even with interest rates dropping to
4%, there are external economic headwinds with are continuing to mute demand. Demand will not change much from
here. It will remain relatively the same through mid-June. From there, expect demand to slowly and systematically fall for
the remainder of the year, starting with numerous summer distractions. Current demand is as strong as it is going to get.
Last year at this time, there were 71 more pending sales, 3% more than today.
The current Expected Market Time increased from 81days to 84 days in the past two weeks, a slight Seller’s Market. It is
still the highest reading for this time of the year since 2011. Last year, the Expected Market Time was at 63 days, better
Luxury End: The luxury market continued to slow.
In the past two-weeks, demand for homes above $1.25 million decreased by 31 pending sales, an 8% drop, and now
totals 361. That is back to back 8% drops over the past month. The luxury home inventory grew by 114 homes and now
totals 2,483, a 5% increase and its highest level in years. The overall expected market time for homes priced above $1.25
million increased from 181 days to 206 over the past two-weeks, a significant increase. Four weeks ago it was at 161
Year over year, luxury demand is down by 76 pending sales, or 17%, and the active luxury listing inventory is up by an
additional 384 homes, or 18%. Extra seller competition and muted demand in the luxury ranges in 2019 is a theme that is
getting louder. The expected market time last year was at 144 days, noticeably less compared to today.
For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the expected market time decreased
from 128 to 125 days. For homes priced between $1.5 million and $2 million, the expected market time increased from
134 to 174 days. For homes priced between $2 million and $4 million, the expected market time increased from 228 to
262 days. For homes priced above $4 million, the expected market time increased from 463 to 568 days. At 568 days, a
seller would be looking at placing their home into escrow around December of 2020.
Orange County Housing Market Summary:
• The active listing inventory increased by 228 homes in the past two weeks, up 3%, and now totals 7,413, the
highest level since September 2014. Last year, there were 5,730 homes on the market, 1,683 fewer than today.
There are 29% more homes than last year.
• Demand, the number of pending sales over the prior month, increased by 2 pending sales in the past two-weeks,
nearly unchanged, and now totals 2,655. Last year, there were 2,726 pending sales, 3% more than today.
• The Expected Market Time for all of Orange County increased from 81 days two weeks ago to 84 days today, a
slight Seller’s Market (between 60 to 90 days) and the highest level for this time of the year since 2011. It was at
63 days last year.
• For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an
expected market time of 61 days. This range represents 39% of the active inventory and 54% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 63 days, a slight Seller’s Market.
This range represents 18% of the active inventory and 24% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is 93 days, a Balanced Market.
• For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time
decreased from 128 to 125 days. For homes priced between $1.5 million and $2 million, the expected market time
increased from 134 to 174 days. For luxury homes priced between $2 million and $4 million, the expected market
time increased from 228 to 262 days. For luxury homes priced above $4 million, the expected market time
increased from 463 to 568 days.
• The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.
• Distressed homes, both short sales and foreclosures combined, made up only 0.8% of all listings and 1.4% of
demand. There are only 22 foreclosures and 41 short sales available to purchase today in all of Orange County,
63 total distressed homes on the active market, down 5 in the last two-weeks. Last year there were 42 total
distressed homes on the market, fewer than today.
• There were 2,558 closed residential resales in April, 2% fewer than April 2018’s 2,614 closed sales. April marked
a 13% increase from March 2019. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures
accounted for just 0.3% of all closed sales, and short sales accounted for 0.4%. That means that 99.3% of all
sales were good ol’ fashioned sellers with equity.