Housing has only grown hotter despite mortgage rates rising considerably since ringing in a New Year, indicating it will take further changes for the market to slow. If mortgage rates rise above 4% and remain elevated with staying power, then housing will finally slow a bit, shifting from an Insane Seller's Market to a regular Hot Seller's Market with longer market times.
The transformation of the housing market occurs over time. It just does not change in the snap of a finger. Houses are not traded on Wall Street. They are not stocks that are easily bought and sold. Instead, they are homes, a place to rest, relax, and unwind, a place to start or raise a family. Everyone needs shelter and must live somewhere. It is understandable that in tracking housing, new trends slowly shift the tide and eventually reveal a change in the housing market.
A new trend has emerged this year, rising rates - and in this report, we discuss that.
Orange County Housing Market Summary:
- The active listing inventory increased by 88 homes, up 7%, and now totals 1,358 homes, its lowest level for this time of the year since tracking began 19 years ago. In January, there were 23% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 709 fewer. Last year, there were 2,438 homes on the market, 1,080 additional homes, or 80% more.
- Demand, the number of pending sales over the prior month, surged by 315 pending sales in the past two weeks, up 19%, and now totals 1,998. Last year, there were 2,863 pending sales, 43% more than today due to the impact of COVID on housing. The 3-year average prior to COVID (2017 to 2019) was 2,393, or 20% more.
- With demand surging compared to the smaller rise in the inventory, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, dropped from 23 to 20 days in the past couple of weeks, an insanely Hot Seller’s Market (less than 60 days). 20 days ties the lowest reading since tracking began 19 years ago, which was also reached in November and December 2021. It was at 26 days in mid-February last year, similar to 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 15 days. This range represents 23% of the active inventory and 30% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time is 16 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 17 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 18 days, a Hot Seller’s Market. This range represents 9% 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 9% of demand.
- For homes priced between $2 million and $4 million, the Expected Market in the past two weeks decreased from 34 to 30 days. For homes priced between $4 million and $8 million, the Expected Market Time decreased from 79 to 58 days. For homes priced above $8 million, the Expected Market Time decreased from 219 to 184 days.
- The luxury end, all homes above $2 million, accounts for 27% of the inventory and 12% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.2% of all listings and 0.2% of demand. There are only 2 foreclosure and 1 short sale available to purchase today in all of Orange County, 3 total distressed homes on the active market, unchanged from two weeks ago. Last year there were 6 total distressed homes on the market, similar to today.
- There were 1,811 closed residential resales in January, 20% less than January 2021’s 2,250 closed sales. January marked a 27% drop compared to December 2021. The sales to list price ratio was 102.3% for all of Orange County. Foreclosures accounted for just 0.3% of all closed sales, and there were no closed short sales. That means that 99.7% of all sales were good ol’ fashioned sellers with equity.
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