Hot November Housing: With an Expected Market Time of only 23 days, the Orange County housing market is hotter than it has ever been for this time of the year.
Housing has been dealing with an unrelenting heat wave of its own since last year. After coming out of the COVID lockdown protocols, the inventory dropped, demand soared, and housing reached record breaking temperatures from July through the end of 2020. It never cooled. In fact, the 37-day Expected Market Time reached in December (the time between hammering in the FOR-SALE sign to opening escrow) was the hottest level of the year for Orange County. In 2021, temperatures climbed to levels never seen before, housing grew hotter, and the market time dove to 21 days on April 1st, the hottest reading since tracking began in 2004. Today’s 23-day Expected Market Time is the lowest for mid-November by far, and not much different than April. The heat wave is intense and will continue through the end of 2021, setting up a remarkably hot start to 2022, much hotter than this year’s start.
The beginning of the Holiday Market is at the end of this week, the start to the Thanksgiving recess for schools. That is when housing shifts from the Autumn Market when both the inventory and demand slowly but surely drop at a very similar pace, to the Holiday Market when both the supply of homes available to purchase and buyer demand plunge.
During the holidays, many buyers who have written offer after offer for months to no avail will place their home searching efforts on hold so that they can enjoy the festivities of the season. Yet, there will still be plenty of buyers willing and able to participate in the housing market fueled by the promise of cashing in on today’s historically low interest rate environment. Unfortunately, with such a limited inventory, the number of potential escrows will drop. Demand, a measure of recent new escrow activity, will plunge to its lowest level of the year upon ringing in the New Year.
A drop in demand does not mean that there will not be a ton of showings, multiple offers, and homes selling for at or above their asking prices. It means that there will be fewer buyers in the marketplace who are competing against each other for far fewer available homes to purchase. There are disproportionately more buyers than there are homes to purchase.
Today’s Insane Seller’s Market is not going anywhere. Rather, it is setting up an extremely hot market to start 2022. It will be an Insane Seller’s Market from January 1st on. Last year there were 2,522 homes available on January 1. Upon celebrating the coming New Year, there will be less than 1,500 homes, 41% fewer than the start to this year. Match a record low supply with overabundant demand juiced by low mortgage rates, and housing will remain hot through the spring of 2022.
Orange County Housing Market Summary:
- The active listing inventory shed 71 homes in the past two weeks, down 4%, and now totals 1,793 homes, its lowest level since tracking. In October, there were 14% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 408 less. Last year, there were 3,843 homes on the market, 2,050 additional homes, or 114% more.
- Demand, the number of pending sales over the prior month, decreased by 107 pending sales in the past two weeks, down 4%, and now totals 2,322. Last year, there were 2,799 pending sales, 21% more than today due to a four-month delay in the Spring Market because of COVID.
- With a similar drop in both supply and demand, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, remained unchanged at 23 days in the past couple of weeks, an extremely Hot Seller’s Market (less than 60 days). It was at 41 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 19 days. This range represents 28% of the active inventory and 33% 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 21% of the active inventory and 27% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time is 18 days, a Hot Seller’s Market. This range represents 10% of the active inventory and 13% of demand.
- For homes priced between $1.5 million and $2 million, the Expected Market increased from 24 to 25 days. For homes priced between $2 million and $4 million, the Expected Market Time decreased from 54 to 42 days. For homes priced above $4 million, the Expected Market Time decreased from 126 to 94 days.
- The luxury end, all homes above $1.5 million, accounts for 33% of the inventory and 18% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.6% of all listings and 0.3% of demand. There are only 8 foreclosures and 2 short sales available to purchase today in all of Orange County, 10 total distressed homes on the active market, up 1 from two weeks ago. Last year there were 12 total distressed homes on the market, similar to today.
- There were 2,778 closed residential resales in October, 17% less than October 2020’s 3,359 closed sales. For the year, through October, there have been 30,097 closed sales, 23% higher than last year. September marked a 7% drop compared to September 2021. The sales to list price ratio was 100.5% for all of Orange County. Foreclosures accounted for just 0.29% of all closed sales, and short sales accounted for 0.04%. That means that 99.7% of all sales were good ol’ fashioned sellers with equity.
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