The Holiday Market: From now through the end of the year, the active inventory typically drops about 27% and demand drops by 31%.
With shorter days and all the distractions of the holidays, housing will downshift with a drop in both the supply, the active inventory of homes available to purchase, and demand, the last 30-days of new escrows. To the buyers and sellers that remain, the overall market will still feel sizzling hot, but there simply will be fewer active participants. Exhausted from politics and COVID-19, the holidays will be a welcome, positive diversion.
The inventory will steadily drop from now through the end of the year. Fewer homeowners will place their homes on the market since 2020’s end is fast approaching. Intuitively, many will simply “wait until spring.” It is a common phenomenon that repeats itself every year. There will still be homeowners lured to enter the fray due to the public knowledge that housing is by far the strongest sector of the United States economy, yet most will opt to wait until at least March of 2021.
At the same time, many homeowners who have attempted to sell for quite some time without success will opt to throw in the proverbial towel and pull their homes off of the market in order to enjoy the holiday season. They will be tired of the lengthy real estate process that did not allow them to achieve their housing goals. In fact, 33% of the current active listing inventory has been on the market for more than two months. It is hard to enjoy all the festivities while buyers continue to set appointments to tour sellers’ homes.
Orange County Housing Market Summary:
- The active listing inventory decreased by 229 homes in the past two-weeks, down 5%, and now totals 3,944, below 4,000 homes for the first time since January. It is the lowest level for an end to October since 2012. COVID-19 is not suppressing the inventory; from mid-September to mid-October there were 22% more homes that came on the market compared to last year. Last year, there were 5,921 homes on the market, 1,977 additional homes, or 50% more.
- Demand, the number of pending sales over the prior month, decreased by 134 pending sales in the past twoweeks, down 4%, and now totals 3,019. COVID-19 has no effect on demand. Record low rates are fueling today’s exceptional demand. Last year, there were 2,275 pending sales, 25% fewer than today.
- The Expected Market Time for all of Orange County decreased from 40 days to 39, a Hot Seller’s Market (less than 60 days). It was at 78 days last year, much 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 29 days. This range represents 34% of the active inventory and 47% of demand.
- For homes priced between $750,000 and $1 million, the expected market time is 25 days, a hot Seller’s Market. This range represents 17% of the active inventory and 27% of demand.
- For homes priced between $1 million to $1.25 million, the expected market time is 40 days, a hot Seller’s Market.
- For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 55 to 50 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 61 to 62 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 109 to 116 days. For luxury homes priced above $4 million, the Expected Market Time increased from 194 to 255 days.
- The luxury end, all homes above $1.25 million, accounts for 39% of the inventory and only 17% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.3% of all listings and 0.4% of demand. There are only 6 foreclosures and 7 short sales available to purchase today in all of Orange County, 13 total distressed homes on the active market, down 6 from two-weeks ago. Last year there were 54 total distressed homes on the market, more than today.
- There were 3,336 closed residential resales in September, 30% more than August 2019’s 2,564 closed sales. September marked a 6% increase compared to August 2020. The sales to list price ratio was 98.4% for all of Orange County. Foreclosures accounted for just 0.1% of all closed sales, and short sales accounted for 0.1%. That means that 99.8% of all sales were good ol’ fashioned sellers with equity.
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