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Housing has been slowing through both the Spring and Summer Markets, yet the slowdown has picked up its pace since transitioning to the Autumn Market.
The Autumn Market begins the moment kids go back to school at the end of August, a bit earlier than the fall equinox, and ends a week before Thanksgiving, the start of the Holiday Market. The best time of the year for housing is during the Spring Market. That is when buyer demand reaches a peak. Many people, especially families with children in school, prefer to isolate their home during the spring and close during the summer while the kids are on break. The inventory rises during the spring as well.
The second best time of the year for the housing market is the Summer Market. The market slows a bit due to all the distractions, including family vacations, summer camps, the beach, the community pool, and amusement parks. There is still plenty of demand, yet it is slowly declining. The inventory normally rises until it finds its peak between July and August and then gradually falls.
During the Autumn Market, the “prime time” season for real estate is now in the rearview mirror. Housing transitions to a slower time of the year. Typically, the inventory and demand decrease slightly at a very similar rate, and the Expected Market Time does not change much.
ATTENTION BUYERS: Do not wait for prices to plunge before purchasing. Buyers who attempt to time the market end up regretting the delay and often get burned. Since rates are forecasted to continue to fall with a cooling economy, more buyer demand is on the horizon. Rates have only plunged recently, starting at the tail end of the Summer Market. Improved affordability did not align with real estate's busiest time of the year. Yet, it will line up much better with the 2025 market, and housing will be hotter with tremendous competition and rising values.
ATTENTION SELLERS: Today’s market requires a meticulous, cautious approach to pricing. Overprice and it will result in wasted market time and an unsuccessful outcome. Homes that are in excellent condition, attractively upgraded, recently updated, and ready for an immediate move-in will attract the most attention and will sell the fastest as long as they are appropriately priced. Competition among sellers has been on the rise, demanding careful pricing and for many to sharpen their pencils.
What we're seeing:
→ Rise of active inventory, unusual for September
→ Demand is slowing down, normal for this time
→ Days on market are increasing
What we can expect:
→ We may be getting good news on rates
→ Some homes will come off the market heading into fall and winter
→ 4th quarter will be good for buyers with the price points
→ Homes will come back on the market in 2025
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 96 homes, up 3%, and now sits at 3,695, its highest level since September 2022. In August, 31% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,083 less. Yet, 300 more sellers came on the market this August compared to August 2023. Last year, there were 2,353 homes on the market, 1,342 fewer homes, or 36% less. The 3-year average before COVID (2017 to 2019) was 6,520, or 76% extra.
- Demand, the number of pending sales over the prior month, decreased by 57 pending sales in the past two weeks, down 4%, and now totals 1,413, its lowest level since February. Last year, there were 1,474 pending sales, 3% more. The 3-year average before COVID (2017 to 2019) was 2,363, or 67% more.
- With supply rising and demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 73 to 78 days in the past couple of weeks, its highest level since January 2023. It was 48 days last year, faster than today. The 3-year average before COVID (2017 to 2019) was 84 days, a bit slower than today.
- In the past two weeks, the Expected Market Time for homes priced below $750,000 increased from 48 to 50 days. This range represents 16% of the active inventory and 25% of demand.
- The Expected Market Time for homes priced between $750,000 and $1 million increased from 45 to 54 days. This range represents 15% of the active inventory and 21% of demand.
- The Expected Market Time for homes priced between $1 million and $1.25 million remained unchanged at 62 days. This range represents 11% 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 66 to 75 days. This range represents 11% of the active inventory and 12% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million increased from 87 to 103 days. This range represents 15% of the active inventory and 11% of demand.
- In the past two weeks, the expected market time for homes priced between $2 million and $4 million increased from 110 to 111 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 351 to 257 days. For homes priced above $6 million, the Expected Market Time decreased from 329 to 295 days.
- The luxury end, all homes above $2 million, account for 32% of the inventory and 17% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.2% of all listings and 0.2% of demand. Only six foreclosures and one short sale are available today in Orange County, with seven total distressed homes on the active market, down two from two weeks ago. Last year, four distressed homes were on the market, similar to today.
- There were 1,877 closed residential resales in August, down 5% compared to July 2023’s 1,979 and down 8% from July 2024. The sales-to-list price ratio was 99.0% for Orange County. Foreclosures accounted for 0.1% of all closed sales, and there were no short sales. That means that 99.9% of all sales were good ol’ fashioned sellers with equity.