It is good ol’ supply and demand. While there is plenty of supply, demand just is not hot like the lower ranges. For homes priced between $1.5 million and $2 million, the expected market time is at 150 days. That would be opening escrow at the end of November. For homes priced between $2 million and $4 million, the expected market time climbs to 225 days. That would be opening escrow in mid-February of next year. For homes priced above $4 million, the expected market time
balloons to 427 days, which translates to opening escrow in September of next year, 14-months from now.
The number of potential buyers that can afford to purchase a home diminishes as prices rise. In the lower ranges, that is where there are plenty of buyers and not enough choices. They attract a steady stream of buyers and many sellers entertain multiple offers. Yet, at the luxury end of the market, most sellers sit on the market for months and do not find success. There is tremendous seller competition for a limited number of buyers able to afford these homes. In order to find success within the luxury price range, sellers must pack their patience and keep their fishing pole in the water for a lot longer than the lower ranges. Some homes may fly off the market at the higher price points, but they are
the exception and not the rule. Luxury sellers also must be priced right. Like any home, buyers are unwilling to pay more than a home’s Fair Market Value. Yet, many luxury sellers arrive at their asking price arbitrarily, a lot higher than their Fair Market Value. They lack true motivation, as many state that they “don’t have to sell” to help rationalize their price. This is the Achilles’ heel of the luxury market and prevents so many sellers from achieving success. Instead, sellers need to approach pricing with extreme care by looking cautiously at all of the most recent comparable pending and closed sales and local data and statistics. The best advice for a luxury seller: do not pay attention to all of the real estate headlines. Instead, they should rely on the professional analysis and advice of a seasoned REALTOR®.
Truly if your home is valued in the $900k range and you are looking to take a leap in into the luxury market now provides you the opportunity to sell high and buy your next home at a value! For homes priced below the $900k, demand is still very strong, with high demand and multiple offers, which we would anticipate continuing, especially on the lower end homes.
Below is a summary of the overall market!
• The active listing inventory increased by 257 homes in the past two weeks, up 4%, and now totals 6,362. Expect the inventory to increase from now through mid-August. Last year, there were 5,936 homes on the market, 426 fewer than today.
• This year, 19% fewer homes have come on the market below $500,000 today compared to last year, and there have been 25% 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, decreased in the past two-weeks by 95 pending sales, down 4%, and now totals 2,604. Demand peaked in mid-May at 2,726 pending sales. Last year, there were 2,885 pending sales, 11% 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 48 days. This range represents 36% of the active inventory and 55% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 64 days, a slight seller’s market (between 60 and 90 days). This range represents 20% of the active inventory and 22% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is 85 days, a slight seller’s market.
• For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 111 to 113 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 162 to 150 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 183 to 225 days. For luxury homes priced above $4 million, the expected market time increased from 368 to 427 days.
• The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.
• The expected market time for all homes in Orange County increased from 68 to 73 days in the past two weeks, a slight seller’s market (from 60 to 90 days).
• Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 1.4% of demand. There are only 25 foreclosures and 33 short sales available to purchase today in all of Orange County, 58 total distressed homes on the active market, up eight in the past two weeks. Last year there were 76 total distressed homes on the market, 31% more than today.
• There were 2,871 closed residential resales in May, down by 9% from May 2019’s 3,147 closed sales. May marked a 10% increase from April 2018. The sales to list price ratio was 98.5% for all of Orange County. Foreclosures accounted for just 0.5% of all closed sales, and short sales accounted for 0.7%. That means that 98.8% of all sales were good ol’ fashioned sellers with equity.
Thinking you are ready to make a move, but not sure how to get started don't hesitate to give us a call. We will review the market in your neighborhood, along with your home amenities. Most importantly what your goals are. We will develop a unique home selling strategy to ensure your goals are met.
For the full OC Market report click here!