In the past two-weeks, demand, the number of pending sales over the prior month, decreased by 117 pending sales, a 5% drop. Demand now totals 2,050, the lowest demand reading for this time of the year since 2007. The housing market has shifted from a supply problem, not enough homes on the market, to a demand problem, not enough pending sales. Interest rates have climbed to their highest levels since 2011. Higher rates and higher values have weakened affordability, impacting demand tremendously.
Last year at this time, demand was at 2,426 pending sales, 15% more than today, or 376 additional pending sales.
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 down the road, increased from 100 to 105 days in the past two-weeks, a Balanced Market (between 90 and 120 days). Last year, the expected market time was at 67 days, drastically different than today.
Below is a summary of the overall market
• The active listing inventory decreased by 6 homes in the past two weeks, almost identical, and now totals 7,201. The inventory finally reached a peak for 2018. Normally it peaks between July and August. Last year, there were 5,382 homes on the market, 1,819 fewer than today.
• So far this year, 14% fewer homes have come on the market below $500,000 compared to last year, and there have been 26% fewer closed sales. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly vanishing.
• Demand, the number of pending sales over the prior month, decreased in the past two-weeks by 117 pending sales, and now totals 2,050. Demand peaked in mid-May at 2,726 pending sales. Last year, there were 2,426 pending sales, 15% more than today.
• The average list price for all of Orange County remained at $1.5 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 still a slight Seller’s Market (less than 90 days) with an expected market time of 77 days. This range represents 42% of the active inventory and 58% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 98 days, a Balanced Market (between 90 to 120 days). This range represents 20% of the active inventory and 21% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is 116 days, a Balanced Market.
• For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 134 to 143 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 164 to 170 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 291 to 384 days. For luxury homes priced above $4 million, the expected market time increased from 328 to 354 days.
• The luxury end, all homes above $1.25 million, accounts for 30% of the inventory and only 14% of demand.
• The expected market time for all homes in Orange County increased from 100 to 105 days, a Balanced Market (between 90 to 120 days).
• Distressed homes, both short sales and foreclosures combined, made up only 1.1% of all listings and 1% of demand. There are only 30 foreclosures and 48 short sales available to purchase today in all of Orange County, 78 total distressed homes on the active market, up by 10 from two-weeks ago. Last year there were 81 total distressed homes on the market, 4% more than today.
• There were 2,090 closed residential resales in September, 24% fewer than September 2017’s 2,746. September marked a 25% drop over August 2018. The sales to list price ratio was 96.9% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.3%. That means that 99.3% of all sales were good ol’ fashioned sellers with equity.
With the current inventory increasing and homes staying on the market, there is more opportunity for buyers. The key however is to make the move, before interest rates begin to increase as projected by the end of the year. Even with the market as it is today, all the numbers indicate homes will appreciate approximately 5% next year and interest rates will be over 5%, which will increase your monthly payment over $515/month.
If you are thinking of selling and buying but think you missed the window, you haven't. Selling today, gives you the opportunity to take advantage of the equity gains your home made in the last few years, while buying in a non-competitive market, i.e. the perfect market to make a move up or down.
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