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During the Holiday Market both the inventory and demand will plunge until ringing in a New Year.
The Holiday Market is when the inventory plunges, demand plunges, and the Expected Market Time increases slightly. Regardless of the economic situation, without fail the cyclical slowdown prevails. Last year the number of available homes was already at historically low levels all year. After peaking in July, a record low peak, it was hard to imagine the inventory could plunge at the end of the year. Yet, from mid-November to the start of the New Year, it sank by 39%. Demand dropped by 44%, and the Expected Market Time increased by a meager two days. Similarly, the 3-year average inventory holiday drop prior to COVID, when housing was a bit more normal, was a 20% decline. Demand dove by 44% and the Expected Market Time increased by an additional 19 days.
The inventory seasonally drops because not many homeowners come on the market at the end of the year. The fewest number of sellers enter the fray in December, 64% less than May, the peak month with the greatest number of new sellers. The second fewest come on in November, 46% less than May’s peak. In addition, many sellers who have not found success, mainly due to price, opt to throw in the towel and pull their homes off the market. The combination of those two forces, fewer new FOR-SALE signs and unsuccessful sellers, cause the inventory to plummet until the start of the New Year.
The holidays are here for the Orange County housing market. The housing needs of many will be placed on pause to enjoy all that this season brings. As a result, expect inventory and demand to plunge and market times to grow a little bit longer as housing moves through its slowest season of the year.
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks plunged by 295 homes, down 8%, and now sits at 3,286, its lowest level since the start of June. In October, there were 35% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 1,042 less. Last year, there were 1,457 homes on the market, 1,829 fewer homes, or 56% less. The 3-year average prior to COVID (2017 to 2019) was 5,359, or 63% more.
- Demand, the number of pending sales over the prior month, increased by 10 pending sales in the past two weeks, up 1%, and now totals 1,212, its first rise since the last two weeks of August. Last year, there were 2,221 pending sales, 83% more than today. The 3-year average prior to COVID (2017 to 2019) was 1,969, or 62% more.
- With supply plunging and demand rising, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, decreased from 89 to 81 days in the past couple of weeks, its lowest level since mid-October. It was 20 days last year, much stronger than today.
- For homes priced below $750,000, the Expected Market Time decreased from 71 to 62 days. This range represents 24% of the active inventory and 31% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time decreased from 72 to 68 days. This range represents 22% of the active inventory and 26% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time decreased from 77 to 68 days. This range represents 12% of the active inventory and 14% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time decreased from 95 to 73 days. This range represents 10% of the active inventory and 11% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time decreased from 110 to 99 days. This range represents 11% of the active inventory and 9% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 137 to 144 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 365 to 527 days. For homes priced above $8 million, the Expected Market Time increased from 220 to 420 days.
- The luxury end, all homes above $2 million, accounts for 25% of the inventory and 10% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.2% of all listings and 0.2% of demand. There are only 5 foreclosures and 3 short sales available to purchase today in all of Orange County, 8 total distressed homes on the active market, up 1 from two weeks ago. Last year there were 7 total distressed homes on the market, similar to today.