OC Housing Report 1.29.18
The housing market is rapidly entering the absolute best time of year to sell: from mid-February to early May. That is when the expected market time drops to its lowest levels of the year. From mid-May through June, a deluge of sellers place their homes on the market, exceeding the number of pending sales, causing the expected time to sell a property to increase.
For the past year or more, the loudest buzz in the real estate community has been the “lack of inventory.” When the Great Recession hit, housing starts, well, stopped. Ever since, there has been a shortage of new homes for people to move into. Since so many people have refinanced with incredibly low interest rates, are locked into low real estate taxes and don’t have compelling choices for new homes to move into, more and more people are staying put. Therefore, we have consistently seen fewer homes sales taking place each year. You’ll notice that in the following report.
• The active listing inventory increased by 67 homes in the past two weeks and now totals 3,774. Expect the inventory to increase from now through mid-Summer. Last year, there were 4,320 homes on the market, 546 more than today.
• There are 25% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 28%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
• Demand, the number of pending sales over the prior month, skyrocketed in the past two weeks by adding an additional 317 pending sales, up 22%. The average pending price is $902,385.
• The average list price for all of Orange County remained at $1.8 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 40 days. This range represents 37% of the active inventory and 59% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 55 days, a “seller’s market” (fewer than 60 days). This range represents 17% of the active inventory and 20% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is 68 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 dropped from 157 days to 112. For homes priced between $1.5 million and $2 million, the expected market time decreased from 188 to 145 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 285 days to 221 days. For luxury homes priced above $4 million, the expected market time fell from 695 to 355 days.
• The luxury end, all homes above $1.25 million, accounts for 37% of the inventory and only 13% of demand.
• The expected market time for all homes in Orange County dropped from 77 days to 64 in the past two weeks, a slight seller’s market (60 to 90 days). From here, we can expect the market time to drop dramatically through mid-February.
• Distressed homes, both short sales and foreclosures combined, make up only 1.2% of all listings and 2.2% of demand. There are only 15 foreclosures and 32 short sales available to purchase today in all of Orange County, that’s 47 total distressed homes on the active market, dropping by 3 in the past two weeks and reaching its lowest level since the very beginning of the Great Recession. Last year there were 91 total distressed sales at this time, 74% more than today.
• There were 2,269 closed residential resales in December, down by 9% from December 2016’s 2,484 closed sales. December marked a 6.5% drop from November 2017. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.9%. That means that 98.3% of all sales were good ol’ fashioned sellers with equity.