Even though the housing market is not as hot as prior years, trends have emerged that confirm that it is starting to heat up.
Green Shoots: Trends are developing which demonstrate that the housing cool down is beginning to heat up.
Headlines are the same across the country: there are more homes on the market and it is taking a lot longer to sell a home. Multiple offers and instantaneous success are characteristics of housing a couple of years ago. After many years of rapid appreciation, demand for homes slowed considerably as mortgage rates climbed to 4.5% in March 2018. Demand deteriorated further when rates unexpectedly squeezed past 5% last November.
Ever since the housing market slowed last year, demand has remained sluggish, a bit subdued in comparison to the hot years from 2012 through 2017. Those markets were characterized by a very limited inventory and sizzling demand. Yet, behind the scenes, the 2019 housing market has been boosted by falling mortgage rates. After starting the year at 4.5%, rates have dropped ever since, dipping below 4% in June for the first time since the end of 2017. Today, they sit at 3.5%, the lowest level since October 2016, nearly three years ago.
As a result of the return to historically low mortgage rates, trends have surfaced that highlight a marketplace that is heating up.
Orange County Housing Market Summary:
– The active listing inventory decreased by 310 homes in the past two-weeks, down 4%, and now totals 6,997. It was the largest drop so far this year. Last year, there were 7,070 homes on the market, 73 more than today. Two years ago, there were 19% fewer homes on the market.
– Demand, the number of pending sales over the prior month, decreased by 20 pending sales in the past two-weeks, down 1%, and now totals 2,528. Last year, there were 2,162 pending sales, 14% fewer than today. Two years ago, demand was 4% stronger than today.
– The Expected Market Time for all of Orange County remained dropped from 86 to 83 days, a slight Seller’s Market (between 60 to 90 days). It was at 98 days last year.
– For homes priced below $750,000, the market is a hot Seller’s Market (less than 60 days) with an expected market time of 57 days. This range represent 38% of the active inventory and 56% of demand.
– For homes priced between $750,000 and $1 million, the expected market time is 66 days, a slight Seller’s Market. This range represents 19% of the active inventory and 24% of demand.
– For homes priced between $1 million to $1.25 million, the expected market time is 121 days, a Balanced Market.
– For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 149 to 146 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 162 to 147 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 249 to 220 days. For luxury homes priced above $4 million, the Expected Market Time increased from 509 to 527 days.
– The luxury end, all homes above $1.25 million, accounts for 33% of the inventory and only 13% of demand.
– Distressed homes, both short sales and foreclosures combined, made up only 0.7% of all listings and 1.4% of demand. There are only 27 foreclosures and 23 short sales available to purchase today in all of Orange County, 50 total distressed homes on the active market, down two in the past two-weeks. Last year there were 56 total distressed homes on the market, slightly more than today.
– There were 2,871 closed residential resales in July, 5% more than July 2018’s 2,734 closed sales. July marked a 6% increase compared to June 2019. The sales to list price ratio was 98.3% for all of Orange County. Foreclosures accounted for just 0.5% of all closed sales, and short sales accounted for 0.24%. That means that 99.3% of all sales were good ol’ fashioned sellers with equity.
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