Demand Spikes: Demand surged in the past couple of weeks with a 38% rise.
COVID-19 has impacted the economy across the board. The economic data prior to the Coronavirus was pumping on all cylinders. Consumer confidence, consumption, unemployment, housing, stocks, leading economic indicators, everything was pointing to a phenomenal 2020. After the virus broke, every chart was impacted severely. Housing was no exception.
Prior to the “stay at home” order in mid-March, housing was a sizzling hot Seller’s Market with extraordinarily little inventory and unbelievable demand. It was the hottest start to a Spring Market since 2013, a spring to remember for Orange County housing. Low mortgage rates, averaging 3.75%, was stoking the fires of demand. When the virus hit, demand plunged, and the market slowed. Now that it has been a couple of months, flattening the Coronavirus curve has been successful so far. Slowly but surely more of the economy is coming back online. As a result, eager buyers who had been sitting on the fence waiting to purchase are jumping back in and ready to take advantage of record low mortgage rates at 3.25%.
The active inventory climbed by 5% in the past two weeks, close to the 5-year average of 4.4% during this time of the year. The inventory remains at lows last seen in 2013. Surging demand is outpacing the rise in supply, resulting in the Expected Market Time (the time between hammering in the FOR-SALE sign and opening escrow) tumbling from 118 days to 90 days, a slight Seller’s Market (between 60 and 90 days). That is a market where sellers get to call more of the shots, yet home values are not changing much at all. Last year at this time, the Expected Market Time was at 84 days very close to today.
Orange County Housing Market Summary:
- The active listing inventory increased by 242 homes in the past two-weeks, up 5%, and now totals 4,867. In the past four-weeks, 38% fewer homes were placed on the market compared to the prior 5-year average; thus, COVID-19 is suppressing the inventory. It was 54% fewer two-weeks ago. Last year, there were 7,413 homes on the market, 2,546 more than today, a 52% difference.
- Demand, the number of pending sales over the prior month, increased by 450 pending sales in the past two-weeks, up 38%, and now totals 1,622, the second largest increase of the year. In the past 5-years, demand has dropped an average of 1%. COVID-19’s effect on housing is beginning to diminish. Last year, there were 2,655 pending sales, 64% more than today.
- The Expected Market Time for all of Orange County decreased from 118 days to 90, a slight Seller’s Market (between 60 and 90 days). The drop was due to the surge in demand outpacing the rise in the supply. It was at 84 days last year, slightly better than today.
- For homes priced below $750,000, the market is a slight Seller’s Market with an expected market time of 61 days. This range represents 36% of the active inventory and 53% of demand.
- For homes priced between $750,000 and $1 million, the expected market time is 68 days, a slight Seller’s Market. This range represents 19% of the active inventory and 25% of demand.
- For homes priced between $1 million to $1.25 million, the expected market time is 120 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 decreased from 192 to 129 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 229 to 158 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 418 to 368 days. For luxury homes priced above $4 million, the Expected Market Time decreased from 586 to 540 days.
- The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 13% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 1.4% of demand. There are only 18 foreclosure s and 24 short sales available to purchase today in all of Orange County, 42 total distressed homes on the active market, down 2 from two-weeks ago. Last year there were 63 total distressed homes on the market, slightly more than today.
- There were 1,712 closed residential resales in April, 34% fewer than April 2019’s 2,599 closed sales. This entirely due to COVID-19 suppressing both supply and demand. April marked a 28% drop compared to March 2020. The sales to list price ratio was 98.3% for all of Orange County. Foreclosures accounted for just 0.3% of all closed sales, and short sales accounted for 0.4%. That means that 99.3% of all sales were good ol’ fashioned sellers with equity.
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