The housing market just dramatically improved as the inventory plunged and demand increased.
Sudden Improvement: The Expected Market Time just dropped by 8%.
Housing has been slowly evolving, flashing signs of change regardless of all the chatter that housing is about to collapse. The twist? In the past two weeks, the market improved significantly, and the Expected Market Time dropped to levels not seen since April, the height of the Spring Market.
In the real estate trenches, buyers are noticing that there are not a lot of choices. In fact, their options are diminishing with the drop in inventory. Exasperated sellers with slow market times and way too many competing FOR SALE signs at the beginning of the year slowly evolved to frustrated buyers bumping into each other as very few homes entered the fray. From 2012 through the first half of 2018, everybody was acutely aware that there were not enough homes on the market. There was a severe supply problem. With mortgage rates climbing all the way up to 5% last November, the market shifted to a demand problem. Payments rapidly drifted skyward and many buyers moved to the sidelines as affordability took a plunge.
Yet, starting in December 2018, mortgage rates drifted downward and crossed below 4% and into the 3’s in June of this year. They have remained in the 3’s ever since. This level has improved affordability tremendously. Even with the unfounded and misguided negative talk about a potential housing bubble or crash, the market has continued to improve, paving the way to solid demand and a rapidly dropping inventory. Once again, there is a supply problem. Everyone will catch on soon as the media reports on the lack of homes for sale through the end of the year and well into 2020.
MAY I HAVE YOUR ATTENTION PLEASE: the housing market is undoubtedly improving. What a twist!
Orange County Housing Market Summary:
– The active listing inventory decreased by 491 homes in the past two-weeks, down 8%, and now totals 5,921, its lowest level since January and the largest drop of the year. Last year, there were 7,231 homes on the market, 1,310 more than today.
– Demand, the number of pending sales over the prior month, increased by 24 pending sales in the past two-weeks, up 1%, and now totals 2,275. Last year, there were 1,857 pending sales, 18% fewer than today.
– The Expected Market Time for all of Orange County dropped from 85 days to 78, a slight Seller’s Market (between 60 to 90 days). It was at 117 days last year and climbing, a much slower market.
– For homes priced below $750,000, the market is a hot Seller’s Market (less than 60 days) with an expected market time of 53 days. This range represents 38% of the active inventory and 56% of demand.
– For homes priced between $750,000 and $1 million, the expected market time is 60 days, also a hot 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 100 days, a Balanced Market.
– For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 118 to 93 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 200 to 159 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 316 to 317 days. For luxury homes priced above $4 million, the Expected Market Time increased from 619 to 825 days.
– The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 12% of demand.
– Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 1.1% of demand. There are only 24 foreclosures and 30 short sales available to purchase today in all of Orange County, 54 total distressed homes on the active market, down one in the past two-weeks. Last year there were 66 total distressed homes on the market, slightly more than today.
– There were 2,564 closed residential resales in September, 22% more than September 2018’s 2,090 closed sales. September marked a 10% drop compared to August 2019. The sales to list price ratio was 97.2% for all of Orange County. Foreclosures accounted for just 0.2% of all closed sales, and short sales accounted for 0.3%. That means that 99.5% of all sales were good ol’ fashioned sellers with equity.
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