In looking at the Expected Market Time, the amount of time it would take to place a home on the market today and open up escrow down the road, it has grown from a low of 51 days at the end of February, to 98 days today. Anything above 90 days is a Balanced Market, one that does not favor sellers or buyers. Basically, the Expected Market Time is the current velocity of the housing market. The overall speed of housing has slowed considerably over time. It is a function of supply and demand. The market slows when supply increases. It also slows when demand decreases. When supply increases and demand drops at the same time, the market rapidly slows; and, that is precisely what occurred from May through today. The supply has climbed from 5,730 homes in May to 7,070 today, a 23% increase and its highest level since August 2016. In the meantime, demand dropped from 2,726 pending sales to 2,162, a 21% drop and its lowest level for this time of the year since 2007.
Sellers need to re-calibrate their expectations. First, the best “bait” that is working today is price. Pricing at or extremely close to a home’s Fair Market Value is critical. Next, sellers must pack their patience. Often, sellers are required to keep their poles in the water and wait for the right buyer to come along. The market, for the most part, is not delivering instant success regardless of how well a home is priced. Another issue is that many sellers are still stretching their asking prices, either wishing they could achieve more than the most recent comparable sale, or they are leaving a little room for negotiations. Both strategies result in not accomplishing the goal in selling. As a result, price reductions are rampant. 44% of the entire active listing inventory has reduced their asking price at least once.
A warning to buyers: it is still not a buyer’s market, so paying at or very close to a home’s Fair Market Value is vital in securing a home. Buyers who are busy writing offers below recent comparable sales are wasting everybody’s time, including their own. The market is balanced. Yes, there are a few more choices, but there is not a glut of inventory. A surplus of inventory is needed to push the market in the buyer’s favor. Today’s market is not even close to generating a surplus of homes. In fact, the inventory has not even reached the long-term average of 8,000 homes and is about to peak for the year. Sellers are not desperate and are not going to cave to a buyer looking for a deal.
Below is summary of the current OC Real Estate Market:
• The active listing inventory increased by 69 homes in the past two weeks, up 1%, and now totals 7,070. Expect the inventory to peak right around now, the start of the Autumn Market. Last year, there were 5,639 homes on the market, 1,431 fewer than today.
• So far this year, 16% fewer homes have come on the market below $500,000 compared to last year, and there have been 25% 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 188 pending sales, 8%, its largest drop of the year, and now totals 2,162. Demand peaked in mid-May at 2,726 pending sales. Last year, there were 2,624 pending sales, 21% more than today.
• The average list price for all of Orange County dropped to $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 72 days. This range represents 41% of the active inventory and 56% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 90 days, a Balanced Market (between 90 to 120 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 113 days, a Balanced Market.
• For luxury homes priced between $1.25 million and $1.5 million, the expected market time increased from 110 to 124 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 135 to 174 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 274 to 257 days. For luxury homes priced above $4 million, the expected market time decreased from 470 to 449 days.
• The luxury end, all homes above $1.25 million, accounts for 31% of the inventory and only 14% of demand.
• The expected market time for all homes in Orange County increased from 89 to 98 days, a Balanced Market (between 90 to 120 days).
• 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 34 short sales available to purchase today in all of Orange County, 56 total distressed homes on the active market, down by two from two-weeks ago. Last year there were 87 total distressed homes on the market, 55% more than today.
• There were 2,784 closed residential resales in August, 11% fewer than August 2017’s 3,116. August marked a 1% increase over July 2018. The sales to list price ratio was 97.8% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.6%. That means that 99% of all sales were good ol’ fashioned sellers with equity.
If selling is on your to do list in 2018, time is now to get your home on the market. With the anticipated market times, we will provide you a strategy to ensure your home is sold as quick as possible and for top dollar. Don't hesitate to give us a call to review the real estate market in your neighborhood.
For a complete report on the OC Market Click Here!
For a complete report on the OC Market Click Here!