Orange County Housing Report | Luxury Soars

Echelberger Group

10/21/21

 

Here is the stunning Beach Road property I am filming this at: www.35781BeachRoad.com

A Hot Luxury Market: In 2021, one in six closed sales were luxury.

Luxury housing emerged from the lockdowns of COVID-19 with unbelievable strength and has reached unprecedented levels.

What sparked the wave of luxury sales? The run-up on Wall Street has certainly helped. After the S&P plunged 32% at the beginning of the pandemic in March 2020, it nearly doubled since, swelling by 94%. It surpassed the prior, pre-COVID, record height in August 2020. The record low interest rate environment is a key factor in luxury’s elevated demand as well. And, the inventory crisis does not only include the lower ranges, luxury buyers have been confronted with an extremely limited supply of available homes to purchase. 

There are more closed sales in the luxury range than ever before. The torrid pace does not look like it going to abate anytime soon based upon current luxury supply and demand. The supply is down by 45% year-over-year, demand is up by 8%, and the Expected Market Time is down from 101 days last year to 51 days today. Last year’s low, 95 days, was achieved in September and, at the time, was the lowest market time level ever for homes priced above $1.5 million in Orange County, extremely hot for luxury. That puts today’s 51-day level into proper perspective. The pace of luxury is mind-blowing.

The housing market has been nothing short of insane, and luxury is no exception. With home values surging, the top 10% of the market is rapidly changing. Starting in 2022, in looking back at all 2021 closed sales, luxury will become all homes priced above $2 million in Orange County. 

A warning to luxury sellers: luxury may be hotter than ever before, but it still is not as hot as the lower price ranges. It takes a little bit longer to sell homes priced above $2 million. It is not an “instant market” like everything priced below $2 million. There are not as many multiple offer situations, there are fewer showing, and fewer homes sell above their asking prices.

 

Orange County Housing Market Summary:

  • The active listing inventory shed 137 homes in the past two weeks, down 6%, and now totals 2,042 homes, its lowest level since tracking. In September, there were 10% fewer homes that came on the market compared to the 3-year average between 2017 to 2019 (2020 was skewed due to COVID-19), 314 less. Last year, there were 4,173 homes on the market, 2,131 additional homes, or 104% more.
  • Demand, the number of pending sales over the prior month, decreased by 6 pending sales in the past two weeks, nearly unchanged, and now totals 2,515. Last year, there were 3,153 pending sales, 25% more than today due to a delay in the Spring Market because of COVID. 
  • With large drops in the supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, decreased from 26 to 24 days in the past couple of weeks, an extremely Hot Seller’s Market (less than 60 days). It was at 40 days last year, slower than today. 
  • For homes priced below $750,000, the market is a Hot Seller’s Market (less than 60 days) with an Expected Market Time of 20 days. This range represents 29% of the active inventory and 35% of demand. 
  • For homes priced between $750,000 and $1 million, the Expected Market Time is 18 days, a Hot Seller’s Market. This range represents 19% of the active inventory and 26% of demand.
  • For homes priced between $1 million to $1.25 million, the Expected Market Time is 20 days, a Hot Seller’s Market. This range represents 10% of the active inventory and 12% of demand.
  • For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 19 days, a Hot Seller’s Market. This range represents 8% of the active inventory and 10% of demand.
  • For homes priced between $1.5 million and $2 million, the Expected Market remained unchanged at 29 days. For homes priced between $2 million and $4 million, the Expected Market Time increased from 41 to 49 days. For homes priced above $4 million, the Expected Market Time decreased from 135 to 129 days.
  • The luxury end, all homes above $1.5 million, accounts for 34% of the inventory and 16% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.5% of all listings and 0.3% of demand. There are only 8 foreclosures and 3 short sales available to purchase today in all of Orange County, 11 total distressed homes on the active market, up 2 from two weeks ago. Last year there were 16 total distressed homes on the market, similar to today.
  • There were 2,981 closed residential resales in September, 11% less than August 2020’s 3,336 closed sales. September marked a 4% drop compared to August 2021. The sales to list price ratio was 100.8% for all of Orange County. Foreclosures accounted for just 0.1% of all closed sales, and short sales accounted for 0.1%. That means that 99.8% of all sales were good ol’ fashioned sellers with equity.

To request to read/download the full report and charts, please email info@echelberger.com.

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