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To walk away from closing with the most money, it is crucial to carefully price a home at the outset of coming on the market.
When a home is placed on the market, ready to be greeted by buyers, the first impression is everything. Many homeowners spend weeks, or even months, preparing their homes before pounding in the FOR-SALE sign in the yard. Many install new carpet and paint throughout. Deferred maintenance is addressed. The yard is spruced up with freshly planted flowers and a layer of topsoil. The goal is to get top dollar for a home.
Overpriced homes ultimately sit without success until they adjust the asking price. Buyers receive notifications from their housing apps that alert them to price reductions. The buyer knows exactly how much the home has been reduced. Unfortunately, homes with price reductions do not obtain the same fanfare as when they initially came on the market. The hype is gone. The anticipation is gone. Even if a buyer did not see the home in person, they felt like they had seen it because they had viewed all the pictures and videos and read the text. Buyers are not eager to see a home that has been reduced. Ultimately, it receives fewer showings than when it initially came on the market. Fewer showings translate to fewer offers and a lower sales price.
Before coming on the market, sellers must ask, “Is the price right?” Will it sell in 8 days with plenty of action? There is more activity in the initial two weeks than at any other time during the marketing process. Or will they have to adjust the asking price and sit on the market for over two months with much less fanfare? In a housing market with 8% mortgage rates, the pressure to price a home appropriately out of the gate is more crucial now than at any other time this year. Carefully and methodically arriving at a home’s Fair Market Value will allow a seller to achieve the best outcome and walk away with the most money.
What we know:
→ Pricing is a different strategy in the 3rd & 4th quarter
→ Seller pricing above market with the intent to lower later end up selling their homes for less
→ Homes priced at market or slightly below sell close to asking
→ The challenge this time of year is accurate pricing
What we can expect:
→ Demand will continue to diminish towards the end of the year
→ More demand in the spring
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks decreased by two homes, nearly unchanged, and now sits at 2,406. In September, 37% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,114 less. Last year, there were 3,677 homes on the market, 1,271 more homes, or 53% higher. The 3-year average before COVID (2017 to 2019) was 6,010, or 150% more, more than double.
- Demand, the number of pending sales over the prior month, decreased by 51 pending sales in the past two weeks, down 4%, and now totals 1,284, the lowest October reading since 2007. Demand is higher than the prior year for the first time since June 2021. Last year, there were 1,270 pending sales, 1% fewer than today. The 3-year average before COVID (2017 to 2019) was 2,180, or 70% more.
- With the inventory nearly unchanged and demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 54 to 56 days in the past couple of weeks, its highest level since February. It was 87 days last year, slower than today.
- For homes priced below $750,000, the Expected Market Time increased from 36 to 42 days. This range represents 18% of the active inventory and 25% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time increased from 35 to 37 days. This range represents 16% of the active inventory and 24% of demand.
- For homes priced between $1 million and $1.25 million, the Expected Market Time decreased from 41 to 35 days. This range represents 9% of the active inventory and 14% of demand.
- For homes priced between $1.25 million and $1.5 million, the Expected Market Time decreased from 54 to 48 days. This range represents 10% of the active inventory and 11% of demand.
- For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 57 to 70 days. This range represents 14% of the active inventory and 11% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks decreased from 95 to 87 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 171 to 175 days. For homes priced above $6 million, the Expected Market Time increased from 326 to 385 days.
- The luxury end, all homes above $2 million, account for 33% 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 four foreclosures and no short sales are available today in Orange County, with four total distressed homes on the active market, down one from two weeks ago. Last year, six distressed homes were on the market, similar to today.