OC Summary Real Estate Snaphot

Is the OC real estate market Hot or Not this July?

There are some mountain roads that are extremely steep. In trying to ascend it behind the wheel of a car, often the pedal is all the way to the floorboard. The engine revs loudly and the car sluggishly makes its way to the top. You want your car to zoom up the mountain, but it’s out of your control. It takes time.

Similarly, the housing market has been moving along sluggishly since the spring of last year. After hearing how slow the market had become in 2018, many homeowners eagerly waited for 2019’s Spring Market. Yet, muted demand was not just a blip on the housing radar screen in 2018. Instead, sluggish demand had been a trend that continued to this day.

There are many experts and plenty of media reports that are beginning to talk about a robust second half to 2019. They point to the tremendous drop in interest rates as a catalyst to a sharp increase in buyer demand. Their thinking is that rates have dropped more than a full percentage point since last November, which has improved affordability dramatically. They are correct; affordability has improved considerably. The payment for a $650,000 mortgage has dropped from $3,489 per month at 5% back in November, to $3,103 per month at 4% today. That’s a savings of $386 per month or $4,632 per year.

The underlying issue is that mortgage rates have been much lower than last year, after dropping considerably in March, but they have not changed the number of pending deals at all. 

The moral to the real estate trend story is that despite the incredible improvement in affordability due to low mortgage rates, buyer demand remains muted. Lower rates are not igniting a run-up in demand. Instead, there is an underlying theme that nobody is talking about. Homes appreciated handsomely from 2012 through the first couple of months of 2018, rising over 70%. That rise has brought housing to a point where many can no longer afford to purchase, and are sitting on the sidelines. 

Homes sell everyday in Orange County, but the homes that are selling are the ones that are priced correctly on the front end. With the a balanced market, pricing  is absolutely crucial in order to find success, when you list your home! It is also the perfect move up market... 

Below is a summary of the OC real estate market!

• The active listing inventory decreased by 39 homes in the past two weeks, down 1%, and now totals 7,561. In the month of June, 12% fewer homes came on the market compared to June 2018. Last year, there were 6,579 homes on the market, 982 fewer than today. There are 15% more homes than last year.

• Demand, the number of pending sales over the prior month, decreased by 87 pending sales in the past two-weeks, down 3%, and now totals 2,461. Last year, there were 2,454 pending sales, similar to today.

• The Expected Market Time for all of Orange County increased from 89 days two weeks ago to 92 days today, a Balanced Market (between 90 to 120 days) and the highest level for this time of the year since 2011. It was at 80 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 64 days. This range represents 39% of the active inventory and 55% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 79 days, a slight Seller’s Market. This range represents 19% of the active inventory and 22% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 98 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 increased from 137 to 143 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 192 to 189 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 250 to 262 days. For luxury homes priced above $4 million, the Expected Market Time decreased from 667 to 518 days. 

• The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 14% of demand.

• Distressed homes, both short sales and foreclosures combined, made up only 0.7% of all listings and 1.5% of demand. There are only 20 foreclosures and 35 short sales available to purchase today in all of Orange County, 55 total distressed homes on the active market, identical to the number two-weeks. Last year there were 64 total distressed homes on the market, slightly more than today.

• There were 2,715 closed residential resales in June, 6% fewer than June 2018’s 2,879 closed sales. June marked a 7% drop from May 2019. The sales to list price ratio was 97.6% for all of Orange County. Foreclosures accounted for just 0.5% of all closed sales, and short sales accounted for 0.4%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.

For a complete copy of this report click here!

Summer Pricing Strategies That Will Get Your Home Sold

Accurately pricing a home initially to avoid price reductions is the most lucrative strategy and a Golden Opportunity!

Sellers who price their homes accurately and avoid price reductions sell their homes for more. This rule of them is true all year long, but during the summer months, it is almost critical.

When a home initially comes on the market, the price will determine whether or not a seller will be raising their arms in the air with delight as they successfully close escrow. Buyers today do not want to pay much more than the most recent closed sale. Prices are a lot stickier. The days of rapid appreciation are now in the rearview mirror. Overpriced homes sit without success. Throwing a price out there just to test the market is not a wise strategy. Instead, carefully and methodically pricing a home is vital to cashing in on the Golden Opportunity, the first few weeks after coming on the market.

It is very telling to look at the sales price to last list price ratio. This refers to the final list price prior to opening escrow. In Orange County, 68% of all closed sales in June did not reduce the asking price at all. The sales price to last list price ratio for these homes was 98.9%, meaning, on average, a home sold within 1.1% of the asking price. A home listed at $600,000 sold for $593,400. In addition, 20% of all closed sales reduced their asking prices between 1% and 4%. The sales to list price ratio for these homes was 97.8%. A home listed at $600,000 sold for $586,800. For homes that reduced their asking prices by 5% or more, 12% of closed sales in June, the sales to list price ratio was 96.6%. A home listed at $600,000 sold for $579,600. Everybody would agree that closing for $593,400 is a lot better than $579,600.

The data is staggering in looking at the sales price to original list price. This is the price when a home initially comes on the market prior to any price reductions. For homes that reduced the asking price between 1% to 4%, the sales to original list price ratio was 95.6%. A home that was listed originally for $614,000 had to reduce the asking price to $600,000 to find success. Homes that reduced the asking price by at least 5% had a sales to original list price ratio of 84.1%. A home that was originally listed at $659,000 had to reduce the asking price, often more than once, to $600,000 to find success.

Accurately pricing is critical in obtaining the highest and best sales price. Homes that do not have to reduce ultimately sell for more. The amount of market time increases substantially for those that must reduce. And, there are a lot of price reductions occurring every week right now. An eye-opening 11% of all active listings reduced their asking prices last week. 

What is so important about the initial few weeks after coming on the market that helps drive success? There are many buyers who have not yet isolated their home and they are literally waiting on the sidelines for something to come on the market that meets their criteria. Every time a home is fresh to the market, there is a flood of initial activity as potential buyers clamor to be one of the first to take a look. There is more activity in the initial two weeks in entering the fray than any other time when a home is marketed. With the Internet, this period is even more important. Most buyers subscribe to a service that allows them to search homes that are on the market. When a home is newly listed, buyers receive email notifications and they are at the top of the list of homes available that match the buyer’s criteria.

With all of the fanfare, it is not a coincidence that the initial listing period is extremely important. Cashing in on the excitement makes a lot of sense; however, many sellers do not understand the significance and waste this GOLDEN OPPORTUNITY. Yes, a seller can always reduce the asking price down the road to be more in line with a home’s Fair Market Value, but the reduction will not be met with the same enthusiasm as the initial first few weeks. There is not as much excitement surrounding a price reduction. When something is brand new to the market, that is exciting. When something has been exposed to the market for a while, it becomes a bit “shop worn” and loses some of its marketing luster. 

The bottom line for sellers: spend more time carefully arriving at the asking price, taking into consideration all the pluses and minuses in the home: condition, upgrades, and location. Having the right price to begin with will not only reduce market time, it will result in more activity and a higher sales price. 

Orange County Real Estate Summary

• The active listing inventory increased by 107 homes in the past two weeks, up 1%, and now totals 7,600, the highest level since September 2014. Last year, there were 6,362 homes on the market, 1,238 fewer than today. There are 19% more homes than last year.

• Demand, the number of pending sales over the prior month, decreased by 113 pending sales in the past two-weeks, down 4%, and now totals 2,548. Last year, there were 2,604 pending sales, 2% more than today.

• The Expected Market Time for all of Orange County increased from 84 days two weeks ago to 89 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 73 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 64 days. This range represents 39% of the active inventory and 55% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 74 days, a slight Seller’s Market. This range represents 18% of the active inventory and 22% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 86 days, a slight Seller’s Market.

• For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time increased from 118 to 137 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 149 to 192 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 254 to 250 days. For luxury homes priced above $4 million, the Expected Market Time increased from 441 to 667 days.  Opportunities for Buyers at this level.

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• 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 0.7% of all listings and 1.4% of demand. There are only 22 foreclosures and 33 short sales available to purchase today in all of Orange County, 55 total distressed homes on the active market, up two the last two-weeks. Last year there were 58 total distressed homes on the market, nearly identical to today.

• There were 2,929 closed residential resales in May, 2% more than May 2018’s 2,870 closed sales. April marked a 15% increase from April 2019. The sales to list price ratio was 97.6% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales, and short sales accounted for 0.6%. That means that 98.6% of all sales were good ol’ fashioned sellers with equity.

For a full copy of this report, click here!

Are you thinking of a move and not sure how to look at the market in your neighborhood? Don't hesitate to give me a call direct to review.  When we look at the market and determine the best pricing strategy for your home, we are looking at it hyper locally.  As well if you are looking to buy, we take the same strategy to ensure the price you are purchasing the home at is not over valued. 

Ready for some summer fun?  Check out our July Calendar of Events throughout Orange County

Orange County Events in July

Can you believe it, today is July 1st.  We are halfway through 2019.   As they say, time flies when you are having fun and July is set to have many fun activities around the county.  

Of course, each city does a wonderful job celebrating the 4th of July, but make sure to check out all the other events scheduled this month!

What are some of your favorite events in the county during summer?  Send us a message and we are happy to share with our readers.  

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If you are thinking of selling your home this summer and not sure how you can fit in some fun and get your house ready, don't hesitate to give me a call direct. The Orange County real estate market is very strong and the perfect market to make a move up. With increase inventory and reduction of rates, now truly is the perfect time to make a move.