Are Cracks Appearing in the OC Real Estate Market?
Even though the housing market is hot, trends have emerged that confirm that it is starting to cool.
Trends are developing which demonstrate that the six-year housing run is beginning to cool. Headlines are the same across the country: there are not enough homes on the market and buyers are having an extremely difficult time finding a home It has been a supply and demand issue for more than six years now, dating back to 2012. The story has not changed much for quite some time; that is, until now! Below is a summary of the current real estate market!
Orange County Housing Market Summary:
• The active listing inventory increased by an incredible 290 homes in the past two weeks, up 6%, and now totals 5,434. Expect the inventory to increase from now through mid-Summer. Last year, there were 5,387 homes on the market, 47 fewer than today.
• This year, 20% fewer homes have come on the market below $500,000 today compared to last year, and there have been 27% fewer closed sales so far this year. 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, increased in the past two-weeks by 35 pending sales, up 1%, and now totals 2,675. Last year, there were 3,012 pending sales, 13% more than today.
• The average list price for all of Orange County remained at $1.7 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 39 days. This range represents 35% of the active inventory and 55% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 49 days, a hot seller’s market (fewer than 60 days). This range represents 18% of the active inventory and 23% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is 81 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 decreased from 104 days to 92. For homes priced between $1.5 million and $2 million, the expected market time decreased from 129 days to 121. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 208 days to 182. For luxury homes priced above $4 million, the expected market time increased from 386 to 456 days.
• The luxury end, all homes above $1.25 million, accounts for 37% of the inventory and only 15% of demand.
• The expected market time for all homes in Orange County increased from 58 days to 61 in the past two weeks, a slight seller’s market (from 60 to 90 days).
• Distressed homes, both short sales and foreclosures combined, make up only 0.8% of all listings and 1.2% of demand. There are only 20 foreclosures and 24 short sales available to purchase today in all of Orange County, that’s 44 total distressed homes on the active market, up one in the past two weeks. Last year there were 81 total distressed sales, 84% more than today.
• There were 2,614 closed residential resales in April, down by 2% from April 2017’s 2,677 closed sales. April was nearly identical to March 2018’s closings. The sales to list price ratio was 98.7% for all of Orange County. Foreclosures accounted for just 0.5% of all closed sales, and short sales accounted for 0.6%. That means that 98.9% of all sales were good ol’ fashioned sellers with equity.
For a full copy of this report, make sure to check out Steven Thomas Reports on Housing
So what does the above mean to you as a homeowner and/or home buyer. Overall the market is very strong in Orange County. It is important if you are thinking of listing your home that pricing is right on target. Homes must be presented well and available to show. It is still a seller's market and a hot one at certain price points, but homebuyers are being cautious on pricing. It's like baking a cake one, ingredient left out the cake just does not taste as good as it should! Opportunity is certainly available for home owners if your home value is under $700,000 as demand is extremely strong for this segment of the market.
If you are thinking of a move, let's grab a cup of coffee and review your needs. One thing is certain, the key to finding the right home in this market is to work with a Realtor that understands your needs and is active in the market to know what homes are available, coming soon and are off market but available.