This is the third report I've shared with you where we're seeing the demand curve flatten out and inventory slightly increase. The headlines you are probably seeing can seem a bit like "The sky is falling!" I want to paint a real picture of what's going on in our market right now by comparing to one or two months ago in today's market update.
For example, two months ago I would list a $1 million property, this would have:
- Received 30 to 40 showings over the weekend
- Generated 10 to 15 offers
- Had price negotiated over asking in favorable terms to the seller, and we would have been done.
Fast forward to this last weekend, a near $1 million property:
- Received 15 showings over the weekend
- Generated 4 offers with 3 over asking
- Negotiated a great deal for the seller.
It can be confusing when you read these articles, thinking that demand is really pulling back and things are slowing down. While things are slowing, I'm still seeing multiple offers on properties, and still going over asking price. The main driver on that is inventory. Yes, inventory is slightly increasing, but it's just nowhere near where we need to be in order to actually slow down this market.
Although rates have gone up 2.25%, half of our offers that are coming are cash, so rates are not affecting THOSE buyers. The other ones are thinking, "Well, maybe I'll go ahead and rent right now." That might be a great option, but rentals are even more scarce and pricing on rentals is through the roof. These buyers have a need to be living in this area and so they go ahead and buy anyways, which is driving the market still.
I expect this to be a strong market through summer, however keep in mind that there are properties that are on the fringe that may have some issues or aren't the nicest property on the block that will no longer be able to receive the same previous multiple offer situations unless they're priced right. That's where we're going to see a slight change in the market. Properties in high demand are still going to be very busy. Always, if I can offer any assistance or answer any questions, please give me a call or text at 949-463-0400.
Orange County Housing Market Summary:
- The active listing inventory surged higher by 372 homes, up 21%, and now totals 2,104 homes, its largest two week gain since April 2018. Yet, it is still the lowest level for this time of the year since tracking began 18 years ago. In April, there were 17% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 695 fewer. Last year, there were 2,274 homes on the market, 170 additional homes, or 8% more. The 3-year average prior to COVID (2017 to 2019) was 6,002, or 185% more.
- Demand, the number of pending sales over the prior month, decreased by 87 pending sales in the past two weeks, down 4%, and now totals 2,154, the largest drop for an April since 2011 (ignoring the COVID lockdown months of 2020). Last year, there were 3,081 pending sales, 43% more than today. The 3-year average prior to COVID (2017 to 2019) was 2,780, or 29% more.
- With supply surging higher and demand dropping, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, surged higher from 23 to 29 days in the past couple of weeks, still an insanely Hot Seller’s Market (less than 60 days), but rapidly cooling. It was at 22 days last year, 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 19 days. This range represents 18% of the active inventory and 28% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time is 23 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 25 days, a Hot Seller’s Market. This range represents 12% of the active inventory and 14% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 30 days, a Hot Seller’s Market. This range represents 10% of the active inventory and 10% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time is 25 days, a Hot Seller’s Market. This range represents 11% of the active inventory and 10% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 40 to 61 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 84 to 107 days. For homes priced above $8 million, the Expected Market Time increased from 157 to 201 days.
- The luxury end, all homes above $2 million, accounts for 29% of the inventory and 10% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.2% of all listings and 0.2% of demand. There are only 3 foreclosures and 1 short sales available to purchase today in all of Orange County, 4 total distressed home on the active market, up 3 from two weeks ago. Last year there were 12 total distressed homes on the market, similar to today.
- There were 2,645 closed residential resales in March, 18% less than March 2021’s 3,212 closed sales. March marked a 49% increase compared to February 2022. The sales to list price ratio was 106.9% for all of Orange County. Foreclosures accounted for just 0.2% of all closed sales, and short sales accounted for 0.1%. That means that 99.7% of all sales were good ol’ fashioned sellers with equity.
To view the complete Report and Charts, join our free Housing Report email list here.