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While the inventory may still be limited and not even close to returning to pre-pandemic levels, there are finally more homes coming on the market.
In 2024, a new trend of housing has developed. Rates have been stubbornly high for nearly two years, and many homeowners are tired of waiting for them to fall. The deficiency in home sellers over the past couple of years meant that many owners had placed their desire to sell on hold. They want to sell for a variety of reasons. Empty nesters want to downsize. Growing families want a larger home with a yard. Others want to relocate closer to their kids. There are a number of reasons people want to move, and they do not want to sit on the sidelines forever. So, in 2024, even though rates have remained high, more homeowners are finally coming on the market.
There were 18% more new listings through April compared to last year, which is an additional 1,396 FOR-SALE signs. While there is still an overabundance of homeowners sitting on the sidelines hunkering down, the extra signs compared to last year are a welcome step in the right direction for an inventory starved for more choices. In April, there were 28% more sellers compared to April 2023, the largest year-over-year rise so far. That is over 600 more new listings.
Compared to the 3-year average before COVID, there are still 35% fewer new listings or 4,966 missing signs through April. Yet, that is much better than last year’s 45% fewer listings or 6,362 missing signs. This new trend of more homes coming on the market occurred while rates exceeded 7% for over half of 2024. Mortgage rates hit 7.5% three times in April, according to Mortgage News Daily. They are forecasted to drop later this year, which will only incentivize more homeowners to list their homes for sale as the difference between their low fixed rate and the prevailing rate will narrow. The lower mortgage rates drop, the more homeowners sitting on the sidelines waiting to sell will jump in and list their homes.
As a result of more homes coming on the market, the active listing inventory has grown from 1,785 at the start of the year to 2,470 today, a rise of 38% or 685 homes. There are 15% more homes available today than last year. A meaningful rise in inventory is another excellent trend that developed this year. Finally, there are more choices.
What we're seeing:
→ Not much has changed in the last two weeks
→ Demand is slow
→ Active inventory on the rise
→ Days on market are getting longer
→ Showings slowed down after last interest rate hike
→ Condos under 900k are seeing a lot of buyers
→ Newly renovated homes are also seeing a lot of interest
What we can expect:
→ Inventory usually goes up June and July
→ Inventory will peak in August
→ Interest rates will go down, market will get hot
→ The market will be busy when school is out
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 150 homes, up 6%, and now sits at 2,470. In April, 32% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,272 less. 604 more sellers came on the market this April compared to 2023. Last year, there were 2,139 homes on the market, 331 fewer homes, or 13% less. The 3-year average before COVID (2017 to 2019) was 6,255, or 153% extra, more than double.
- Demand, the number of pending sales over the prior month, increased by 52 pending sales in the past two weeks, up 3%, and now totals 1,759. Last year, there were 1,660 pending sales, 6% fewer. The 3-year average before COVID (2017 to 2019) was 2,765, or 57% more.
- With supply rising faster than demand, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 41 to 42 days in the past couple of weeks. It was 39 days last year, similar to today. The 3-year average before COVID (2017 to 2019) was 68 days, slower than today.
- In the past two weeks, the Expected Market Time for homes priced below $750,000 decreased from 32 to 31 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 decreased from 24 to 23 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 26 to 28 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 decreased from 33 to 28 days. This range represents 10% of the active inventory and 14% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million increased from 40 to 46 days. This range represents 13% of the active inventory and 12% of demand.
- In the past two weeks, the expected market time for homes priced between $2 million and $4 million increased from 65 to 66 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 184 to 167 days. For homes priced above $6 million, the Expected Market Time decreased from 439 to 413 days.
- The luxury end, all homes above $2 million, account for 38% of the inventory and 16% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.2% of all listings and 0.1% of demand. Only three foreclosures and two shorts sales are available today in Orange County, with five total distressed homes on the active market, up one from two weeks ago. Last year, ten distressed homes were on the market, similar to today.