Even with a rising mortgage interest rate environment, it is the hottest start to a year since tracking began in 2004 by a landslide.
With a ridiculously record low supply of homes available to purchase matched with a strong demand, the housing market is white hot.
The COVID-19 pandemic has severely disrupted the supply of goods and commodities. Initially, back in March 2020, there was a relentless run on toilet paper when people stood in long lines for hours as new shipments arrived. As the pandemic evolved, so did the impact on the supply of computer chips, which ultimately hit the automobile industry the hardest. Flash forward to today and new car lots are empty, there is a COVID premium on the sticker price, and many must wait weeks or months for delivery. It is just as challenging to obtain a used car and prices have gone through the roof. It boils down to supply and demand. Even when demand levels do not change much, yet inventories drop substantially, prices soar.
That is precisely what is occurring in the Orange County housing market today. The supply of homes available to purchase today is at a staggering, mind blowing, record low level, and it is matched with strong demand that is not much different than prior to the pandemic. As a result, the market has been white hot, insane, from day one of 2022. It is an unprecedented start to the year that is without comparison.
As the inventory dropped, housing has grown hotter and hotter. Today, there are only 1,100 homes available to purchase, an unmatched, ultra-low supply of homes that shattered the prior record low achieved in January 2021, at 2,633 homes. Last year’s start crushed the 2013 record start of 3,161 homes.
When the inventory is this low, just about everything that is placed on the market is thrown into escrow after being exposed to the marketplace for less than a week. As a result, the Expected Market Time (the time between hammering in the FOR-SALE sign to opening escrow) started this year at 25 days, shattering last year’s record 42-day start.
ATTENTION BUYERS: Waiting for the market to get easier for buyers is not the answer.
ATTENTION SELLERS: Take advantage of the hot market by pricing a home as close to the last comparable or pending sale.
Orange County Housing Market Summary:
- The active listing inventory added 28 homes, up by 3%, and now totals 1,100 homes, its lowest start to the year since tracking began 18 years ago. In December, there were 4% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 65 fewer. Last year, there were 2,633 homes on the market, 1,533 additional homes, or 139% more.
- Demand, the number of pending sales over the prior month, decreased by 296 pending sales in the past two weeks, down 19%, and now totals 1,295. Last year, there were 1,895 pending sales, 46% more than today due to a delay in the 2020 Spring Market because of COVID.
- With demand plunging coupled with a slight rise in the supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 20 to 25 days in the past couple of weeks, its lowest level to start a year and an insanely Hot Seller’s Market (less than 60 days). It was at 42 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 27% of the active inventory and 35% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time is 19 days, a Hot Seller’s Market. This range represents 20% of the active inventory and 26% 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 8% of the active inventory and 12% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 14 days, a Hot Seller’s Market. This range represents 5% of the active inventory and 10% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time is 24 days, a Hot Seller’s Market. This range represents 8% of the active inventory and 8% of demand.
- For homes priced between $2 million and $4 million, the Expected Market increased from 44 to 55 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 101 to 159 days. For homes priced above $8 million, the Expected Market Time decreased from 713 to 210 days.
- The luxury end, all homes above $2 million, accounts for 32% of the inventory and 9% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.3% of all listings and 0.8% of demand. There are only 3 foreclosures and no short sales available to purchase today in all of Orange County, 3 total distressed homes on the active market, down 6 from two weeks ago. Last year there were 9 total distressed homes on the market, similar to today.
- There were 2,570 closed residential resales in November, 10% less than November 2020’s 2,843 closed sales. For the year, through November, there have been 32,669 closed sales, 20% higher than last year. September marked a 7% drop compared to October 2021. The sales to list price ratio was 101.1% for all of Orange County. Foreclosures accounted for just 0.2% of all closed sales, and short sales accounted for 0.2%. That means that 99.6% of all sales were good ol’ fashioned sellers with equity.
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