Orange County Housing Report | The Showdown
Supply and Demand: A low supply is confronted by low demand.
Weak demand has been pitted against a very low supply of homes to purchase. This is precisely why the market is moving towards a Balanced Market and not a Buyer’s Market. The good news for buyers is that they no longer need to rush to purchase. Multiple offers and buyers tripping over each other is no longer the norm. But, that does not mean that buyers are going to get “a deal.” This is NOT the Great Recession. That was a deep buyer’s market fueled by an oversupply of homes and a housing stock built on risky loans.
The showdown has begun. The “supply problem” has been matched with a “demand problem.” The combination of these two forces will result in housing slowing to a Balanced Market.
COVID-19 Update: Real estate is now an essential service.
On March 28th, the U.S. Department of Homeland Security issued an “Advisory Memorandum” that identified essential, critical
infrastructure workers during the COVID-19 response, which included the real estate industry. The order does not mean that open
houses and showing, as usual, are back. Thus, the California Association of REALTORS® has issued “Guidelines for Real Estate
Best Practices During COVID-19.” Homes in escrow can now conduct professional inspections and on-site appraisals can take
place. Virtual tours and professional pictures are strongly recommended and encouraged. Showing properties by appointment
only is advised. The bottom line: while real estate is now an essential service, everyone needs to be mindful of social distancing
and taking all of the necessary precautions in keeping everybody safe and stopping the spread of the virus.
Orange County Housing Market Summary:
- The active listing inventory increased by 24 homes in the past two-weeks, up 0.6%, and now totals 4,183. Last year, there were 6,876 homes on the market, 2,693 more than today, a 64% difference.
- Demand, the number of pending sales over the prior month, decreased by 814 pending sales in the past two-weeks, down 34%, and now totals 1,584. In the past 5-years, demand has increased an average of 5%. The drop is due to the Coronavirus. Last year, there were 2,445 pending sales, 54% more than today.
- The Expected Market Time for all of Orange County increased from 52 days to 79, a slight Seller’s Market (from 60 to 90 days). The increase is due to the Coronavirus. It was at 84 days 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 51 days. This range represents 36% of the active inventory and 56% of demand.
- For homes priced between $750,000 and $1 million, the expected market time is 61 days, a slight Seller’s Market. This range represents 18% of the active inventory and 24% of demand.
- For homes priced between $1 million to $1.25 million, the expected market time is 109 days, a Balanced Market (between 90 and 120 days).
- For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time increased from 80 to 120 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 80 to 140 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 248 to 323 days. For luxury homes priced above $4 million, the Expected Market Time increased from 377 to 903 days.
- The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 14% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 1% of all listings and 1% of demand. There are only 21 foreclosure s and 24 short sales available to purchase today in all of Orange County, 45 total distressed homes on the active market, down 1 from two-weeks ago. Last year there were 46 total distressed homes on the market, nearly the same as today.
- There were 2,044 closed residential resales in February, 31% more than February 2019’s 1,564 closed sales. February marked a 12% increase compared to January 2020. The sales to list price ratio was 99.9% for all of Orange County.
Foreclosures accounted for just 0.6% of all closed sales, and short sales accounted for 0.7%. That means that 98.7% of all sales were good ol’ fashioned sellers with equity.
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