Go for Gold - Don't Wait

Echelberger Group

08/9/24

To get the complete Report and Charts, join our free Housing Report email list here.

 
Mortgage rates have plunged from 7.5% in April to 6.34% today, opening up a window of opportunity for buyers who should not wait.
 
Olympic gold medal winners perfect their game plans and execute precise timing and strategy to succeed. On the track, many runners wait too long for their final push and cross the finish line out of medal contention. The commentators exclaim that they “should have gone sooner.” The athletes are left second-guessing themselves, wishing they had not waited.
 
Many buyers have been sitting on the sidelines, waiting for rates to come down. Now that rates have plummeted from 7.5% in April to 6.34% today, according to Mortgage News Daily, many buyers wonder if they should pull the trigger and purchase now or wait for rates to fall further. Sitting on the fence and waiting will prove to be the incorrect strategy, leaving many to wish that they had bought sooner.
 
Long-term, 30-year mortgage rates move ahead of the Federal Reserve Rate cuts. The Federal Reserve (Fed) has not cut rates once since the historical increases from 2022 through 2023, yet mortgage rates have moved all over the place, even eclipsing 8% last October. The movement is based on where investors believe the direction that the Fed’s short-term Federal Funds rate policy will move.
 
With inflation continuing to ease, the job market cooling, and unemployment rising, it is becoming increasingly clear that the FED is too restrictive, and they will need to cut rates when they meet in mid-September. As a result, in less than two weeks, mortgage rates have plunged from 6.91% to 6.34% today. September’s rate cut, currently projected to be a 0.5% snip by Wall Street, is already baked into today’s mortgage rates. When they do trim the Federal Funds rate in September, do NOT expect mortgage rates to drop another 0.5%. This is where buyers sitting on the sidelines are mistaken. They hear that the Fed will cut, but the headlines and news refer to the short-term Federal Funds rate, not long-term mortgage rates. When they do cut, expect credit card, automobile, and equity lines of credit rates to all drop, which are all tied to the Federal Funds rate, but NOT long-term rates utilized in purchasing homes.
 
Today is already one of the best times to purchase in the past couple of years. The Orange County inventory is at 3,426, up 28% or 951 homes compared to last year. There are way more choices in every price range. Demand, a snapshot of the number of new pending sales over the prior month, is at 1,530, down 3% compared to last year, 50 fewer pending sales. With much higher inventory levels and demand on par with the previous year, the Expected Market Time, the number of days it takes to sell all Orange County listings at the current buying pace, is 67 days, much slower than last year’s 47-day speed. As rates remain at these low levels with duration, expect the inventory to fall, demand to rise, and the Expected Market Time to drop for the remainder of the year.
 
The most favorable condition for buyers is NOW. Just like so many Olympic athletes crossing the finish line first, it is time for buyers to make that gold medal decision and pull the trigger now. Do not wait.
 
Orange County Housing Market Summary:
  • The active listing inventory in the past couple of weeks increased by 55 homes, up 2%, and now sits at 3,426, its highest level since November 2022. In July, 27% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 996 less. Yet, 441 more sellers came on the market this July compared to July 2023. Last year, there were 2,475 homes on the market, 951 fewer homes, or 28% less. The 3-year average before COVID (2017 to 2019) was 6,753, or 97% extra, nearly double.
  • Demand, the number of pending sales over the prior month, decreased by one pending sale in the past two weeks, nearly unchanged, and now totals 1,530, still its lowest level since February. Last year, there were 1,580 pending sales, 3% more. The 3-year average before COVID (2017 to 2019) was 2,630, or 72% more.
  • With supply climbing and demand unchanged, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 66 to 67 days in the past couple of weeks. It was 47 days last year, faster than today. The 3-year average before COVID (2017 to 2019) was 78 days, a bit slower than today.
  • In the past two weeks, the Expected Market Time for homes priced below $750,000 decreased from 47 to 45 days. This range represents 15% of the active inventory and 23% of demand. 
  • The Expected Market Time for homes priced between $750,000 and $1 million decreased from 46 to 42 days. This range represents 13% of the active inventory and 22% of demand.
  • The Expected Market Time for homes priced between $1 million and $1.25 million increased from 46 to 49 days. This range represents 11% of the active inventory and 15% of demand.
  • The Expected Market Time for homes priced between $1.25 million and $1.5 million increased from 52 to 57 days. This range represents 10% of the active inventory and 12% of demand.
  • The Expected Market Time for homes priced between $1.5 million and $2 million increased from 65 to 76 days. This range represents 15% of the active inventory and 13% of demand.
  • In the past two weeks, the expected market time for homes priced between $2 million and $4 million decreased from 116 to 114 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 156 to 170 days. For homes priced above $6 million, the Expected Market Time increased from 630 to 656 days. 
  • The luxury end, all homes above $2 million, account for 36% of the inventory and 15% of demand.
  • Distressed homes, both short sales and foreclosures combined, comprised only 0.3% of all listings and 0.3% of demand. Only six foreclosures and three short sales are available today in Orange County, with nine total distressed homes on the active market, up one from two weeks ago. Last year, seven 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.

WORK WITH US

We realize the purchase and sale of real estate property is probably one of the most important transactions that a person can make. We’ve built our business and outstanding reputation by helping our clients navigate through the process efficiently and professionally from start to finish.

Contact Us

Follow Us on Instagram