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As the inventory continues to rise, more sellers are reducing their asking prices or pulling their homes off the market altogether, indicative that far too many homes are overpriced.
Garage sales are a great way to get rid of the constant accumulation of “stuff” that is no longer used. A successful sale opens up more room and space in the garage, especially when it is a large item like a bike or furniture. Unfortunately, for many, the initial asking price is stretched to a point where nobody is interested. As the morning wears on, it is time to make a decision: lug that large piece of furniture back into the garage, unwilling to part because of price, or lower the price to a point where someone will finally buy it. There is not as much interest because the potential buyer traffic fades as the day grows longer. The price gets slashed further until someone finally agrees to the lowered price.
Similarly, many sellers jump into the housing arena and stretch the asking price for a variety of reasons, only to sit on the market with no offers and no success. They, too, must decide whether to reduce the asking price to the Fair Market Value or pull their home off the market altogether.
Many sellers in Orange County have thrown in the proverbial towel. Through September, 21% more homes have been pulled off the market than last year, 3,708 compared to 3,075. It was up 79% year over year in September, 636 versus 356. After a lack of success in the Spring and Summer Markets, now that the kids are back in school, sellers have realized that it is no longer the most favorable time of the year to sell.
Another telling sign that sellers have been setting unrealistic expectations is the high number of sellers adjusting their asking price. A surprising 34% of the current listing inventory has reduced the asking price at least once.
Proper pricing is essential for a seller to secure success. Many homeowners come on the market feeling that their home is the absolute best in the neighborhood and, therefore, should fetch the highest sales price, more than the most recent comparable sale. This leads to stretching the price too high and deters buyers from writing an offer.
What we're seeing:
→ Interest rates went up last 2 weeks
→ Demand went down
→ Active inventory increased
→ Totally inventory has slightly increased
What we can expect:
→ Heading into holiday season, active inventory will turn
→ Sellers will try again in the spring
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 28 homes, up 1%, and now sits at 3,694. In September, 25% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 743 less. Yet, 323 more sellers came on the market this September compared to September 2023. Last year, there were 2,408 homes on the market, 1,286 fewer homes, or 35% less. The 3-year average before COVID (2017 to 2019) was 6,306, or 71% extra.
- Demand, the number of pending sales over the prior month, increased by 44 pending sales in the past two weeks, up 3%, and now totals 1,598, its highest level since the beginning of July. Last year, there were 1,335 pending sales, 16% fewer. The 3-year average before COVID (2017 to 2019) was 2,206, or 38% more.
- With demand rising faster than supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, decreased from 71 to 69 days in the past couple of weeks. The 3-year average before COVID (2017 to 2019) was 87 days, slower than today.
- In the past two weeks, the Expected Market Time for homes priced below $750,000 increased from 49 to 53 days. This range represents 17% of the active inventory and 22% of demand.
- The Expected Market Time for homes priced between $750,000 and $1 million decreased from 47 to 46 days. This range represents 14% of the active inventory and 22% of demand.
- The Expected Market Time for homes priced between $1 million and $1.25 million decreased from 50 to 48 days. This range represents 11% of the active inventory and 16% of demand.
- The Expected Market Time for homes priced between $1.25 million and $1.5 million decreased from 66 to 56 days. This range represents 11% of the active inventory and 13% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million increased from 84 to 86 days. This range represents 15% of the active inventory and 12% of demand.
- In the past two weeks, the expected market time for homes priced between $2 million and $4 million decreased from 108 to 103 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 199 to 194 days. For homes priced above $6 million, the Expected Market Time increased from 391 to 444 days.
- The luxury end, all homes above $2 million, account for 32% of the inventory and 15% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.1% of all listings and 0.1% of demand. Only four foreclosures and one short sale are available today in Orange County, with five total distressed homes on the active market, unchanged from two weeks ago. Last year, five distressed homes were on the market, identical to today.
- There were 1,622 closed residential resales in September, down 2% compared to September 2023’s 1,647 and down 14% from August 2024. The sales-to-list price ratio was 98.9% for Orange County. Foreclosures accounted for 0.1% of all closed sales, and there were no short sales. That means that 99.9% of all sales were good ol’ fashioned sellers with equity.