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Demand is starting to slow as kids get out of school and families are enjoying their summer holidays.
What we have all been seeing lately:
- Unprecedented rise in interest rates
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The stock market is struggling
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Gas prices continue to rise
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Talks of recession
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Demand is slowing down considerably
In our area in June and July we almost always slow down with school being out and people going on vacations. We just took a 2 year break from this with COVID and things are finally starting to normalize again for the summer months.
What we can expect:
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Active inventory to rise
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A more stabilized market
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Transactions still happening
Combine the slightly slower Summer Market with the current rising mortgage rate environment and demand will continue to slowly cool over the next several months. The inventory will rise on the backs of homes that are overpriced, in poor condition, or have an inferior location. Carefully arriving at the price is crucial for sellers to secure a successful outcome. Homes that are priced according to their Fair Market Value will generate offers to purchase. Homeowners who stretch the asking price will waste valuable market time and will need to reduce to sell. In fact, 27% of all available homes in Orange County have reduced the asking price at least once.
If you're selling a house: Sharpen your pencils, scrutinize all comparable data, and price your home so that it will sell. Do not learn the hard way that this market is not the same as the frenzied market of the past two years.
If you're buying a home: There are finally more choices, but if a home is priced well, it will not last. Do not mistaken a slower market as a Buyer’s Market. It is still a Seller’s Market. Buyers looking to negotiate should consider homes that have been on the market for a while and are having trouble securing a buyer willing to make an offer to purchase.
Orange County Housing Market Summary:
- The active listing inventory continued to surge higher by 362 homes, up 13%, and now totals 3,059 homes, its highest level since December 2020. In May, there were 16% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 654 fewer. Last year, there were 2,214 homes on the market, 845 fewer homes, or 28% less. The 3-year average prior to COVID (2017 to 2019) was 6,501, or 113% more.
- Demand, the number of pending sales over the prior month, decreased by 93 pending sales in the past two weeks, down 4%, and now totals 2,020. This is the lowest level at this time of year since 2007. Last year, there were 3,057 pending sales, 51% more than today. The 3-year average prior to COVID (2017 to 2019) was 2,766, or 37% more.
- With supply soaring higher and demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, surged from 38 to 45 days in the past couple of weeks, a Hot Seller’s Market (less than 60 days). Housing is rapidly cooling and the market time is at its highest level since July of 2020. It was at 22 days last year, much stronger 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 27 days. This range represents 17% of the active inventory and 28% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time is 41 days, a Hot Seller’s Market. This range represents 24% of the active inventory and 27% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time is 42 days, a Hot Seller’s Market. This range represents 13% of the active inventory and 14% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 45 days, a Hot Seller’s Market. This range represents 11% of the active inventory and 11% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time is 59 days, a Hot Seller’s Market. This range represents 12% of the active inventory and 9% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 61 to 77 days. For homes priced between $4 million and $8 million, the Expected Market Time decreased from 146 to 144 days. For homes priced above $8 million, the Expected Market Time increased from 270 to 327 days.
- The luxury end, all homes above $2 million, accounts for 23% of the inventory and 12% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.2% of all listings and 0.1% of demand. There are only 2 foreclosures and 4 short sales available to purchase today in all of Orange County, 6 total distressed home on the active market, up 2 from two weeks ago. Last year there were 10 total distressed homes on the market, similar to today.
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