After an extremely cool December, housing is starting to warm up a bit.
Housing Thaw: With rising demand, the housing market is starting to move its way towards a Balanced Market.
It is a Southern California chilly morning. You climb into your car for the daily commute to the office and blast the heater, but it blows cold air because the engine is not hot yet. Your fingers are numb, and you cannot wait for the temperature to start to rise. After a couple of minutes, the blowing air begins to warm. That is precisely how the housing market starts every year. Housing’s engine is cold on the first of January and takes a few weeks to heat up. This year is no exception, the market is finally starting to warm up a bit.
The housing market in 2019 started off a lot colder than everybody had been accustomed to. It was the coldest start since 2011 with an Expected Market Time of 152 days, Buyer’s Market territory (the Expected Market Time is the amount of time it would take to place a home on the market today and enter escrow down the road). But, in the past couple of weeks, the market began its annual thaw.
ORANGE COUNTY HOUSING MARKET SUMMARY:
- The active listing inventory increased by 211 homes in the past two weeks and now totals 6,122, a 4% rise. Last year, there were 3,774 homes on the market, 2,348 fewer than today. There are 62% more homes than last year.
- In 2018, 11% fewer homes came on the market below $500,000 compared to 2017, and there were 26% fewer closed sales. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly vanishing.
- Demand, the number of pending sales over the prior month, climbed in the past two-weeks by 270 pending sales, up 21%, and now totals 1,435, its lowest level for this time of the year since 2008. Last year, there were 1,764 pending sales, 23% more than today.
- The Expected Market Time for all of Orange County decreased from 152 days two weeks ago to 128 days today, a slight Buyer’s Market (between 120 to 150 days) and the highest level for this time of the year since 2011. It was at 64 days last year.
- For homes priced below $750,000, the market is a Balanced Market (between 90 and 120 days) with an expected market time of 97 days. This range represents 44% of the active inventory and 58% of demand.
- For homes priced between $750,000 and $1 million, the expected market time is 102 days, a Balanced Market. This range represents 18% of the active inventory and 23% of demand.
- For homes priced between $1 million to $1.25 million, the expected market time is 156 days, a Buyer’s Market.
- For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time decreased from 252 to 185 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 365 to 305 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 347 to 314 days. For luxury homes priced above $4 million, the expected market time decreased from 1,279 to 794 days.
- The luxury end, all homes above $1.25 million, accounts for 30% of the inventory and only 13% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 2.1% of demand. There are only 17 foreclosures and 39 short sales available to purchase today in all of Orange County, 56 total distressed homes on the active market, down 11 from two-weeks ago. Last year there were 47 total distressed homes on the market, slightly less than today.
- There were 1,789 closed residential resales in December, 21% fewer than December 2017’s 2,269. December marked a 12% drop over November 2018. The sales to list price ratio was 96.3% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.7%. That means that 98.9% of all sales were good ol’ fashioned sellers with equity..
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