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Year over year, the active listing inventory is higher, demand is about the same, and it is taking a lot longer to sell a home, which translates to a market lining up more and more in favor of buyers.
The market was moving at a much swifter pace back in the spring. Sellers were cruising down the housing highway. That is just not the case today. It has significantly slowed. The Orange County housing market has shifted from a hot seller’s market to a much more balanced one. Buyers are getting a much-needed breather.
To better understand today’s market, comparing this year to where housing was one year ago is helpful. The active inventory currently sits at 3,371 homes versus 2,389 last year. That is up 982 homes or 41%. Every price range has a much stronger supply. Last year, housing was plagued by a scarcity of available homes to purchase. The most substantial issue affecting inventory is that homeowners are “hunkering down” in their homes and are unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage.
The excess year-over-year supply and similar demand have resulted in much longer market times. Homes are sitting on the market a lot longer with increased seller competition. The Expected Market Time today is 66 days, up 21 compared to last year’s 45-day level. That is a noticeable difference in the marketplace. As a result, there are a lot more price reductions. A revealing 30% of all available homes have reduced their asking price at least once. This has been growing as the market has continued to cool.
Today’s housing market is much different than last year. With more choices in every price range, the sense of urgency for buyers has dissipated. Not as many homes are snapped up the moment the FOR-SALE sign is pounded into the ground. There are vastly more open houses to tour on the weekends. Home values are no longer skyrocketing higher.
What we're seeing:
→ Demand has flatlined
→ Active inventory has slowed down
→ More price reductions are happening
→ This pace is normal for the summer
→ Homes coming on the market are accurately priced
→ Buyers and Sellers market
What we can expect:
→ End of July through August demand will increase
→ Rise in pending listings
→ No change in the interest rates
→ Overpriced listings will stay on the market longer
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks jumped by 319 homes, up 10%, and now sits at 3,371, its highest level since November 2022. It was the largest two-week climb so far this year. In June, 34% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,323 less. Yet, 254 more sellers came on the market this June compared to June 2023. Last year, there were 2,389 homes on the market, 982 fewer homes, or 29% less. The 3-year average before COVID (2017 to 2019) was 6,776, or 101% extra, a little more than double.
- Demand, the number of pending sales over the prior month, decreased by 93 pending sales in the past two weeks, down 6%, and now totals 1,531, its lowest level since February. Last year, there were 1,598 pending sales, 4% more. The 3-year average before COVID (2017 to 2019) was 2,578, or 68% more.
- With supply climbing fast and demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, jumped from 56 to 66 days in the past couple of weeks. It was 45 days last year, faster than today. The 3-year average before COVID (2017 to 2019) was 80 days, slower than today.
- In the past two weeks, the Expected Market Time for homes priced below $750,000 increased from 44 to 47 days. This range represents 17% of the active inventory and 23% of demand.
- The Expected Market Time for homes priced between $750,000 and $1 million increased from 35 to 46 days. This range represents 14% of the active inventory and 20% of demand.
- The Expected Market Time for homes priced between $1 million and $1.25 million increased from 42 to 46 days. This range represents 10% of the active inventory and 14% of demand.
- The Expected Market Time for homes priced between $1.25 million and $1.5 million increased from 39 to 52 days. This range represents 11% of the active inventory and 13% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million increased from 49 to 65 days. This range represents 14% of the active inventory and 14% of demand.
- In the past two weeks, the expected market time for homes priced between $2 million and $4 million increased from 109 to 116 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 148 to 156 days. For homes priced above $6 million, the Expected Market Time increased from 557 to 630 days.
- The luxury end, all homes above $2 million, account for 35% of the inventory and 15% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.2% of all listings and 0.3% of demand. Only five foreclosures and three short sales are available today in Orange County, with eight total distressed homes on the active market, up one from two weeks ago. Last year, nine distressed homes were on the market, similar to today.
- There were 1,809 closed residential resales in June, down 9% compared to June 2023’s 1,993 and down 15% from May 2024. The sales-to-list price ratio was 100.3% for Orange County. Short sales accounted for 0.1% of all closed sales and no foreclosures. That means that 99.89% of all sales were good ol’ fashioned sellers with equity.