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With sky-high rates and a collapse in home affordability, many wrongly conclude that there will be a wave of foreclosures and it is just a matter of time before the housing market crashes.
Collectively, homeowners across the U.S. are healthier than ever before, which will prevent distressed sales and a housing crash.
Today, only four foreclosures and two short sales are available to purchase in Orange County; that is only six total distressed listings. Distress demand, the number of new pending sales over the prior month, is at one. Foreclosures and short sales represent only 0.3% of the active listing inventory and 0.07% of overall demand.
The bottom line: do not count on a wave of distressed homes or a housing crash. The Orange County Expected Market Time is at 50 days. Even if the market were to line up slightly favoring buyers in the negotiating process, the inventory crisis and strong housing stock would prevent a substantial downturn.
What we're seeing:
→ Active inventory is flat
→ Demand dropping slightly
→ Days on market taking longer
→ People hoping interest rates will go down
What we can expect:
→ Demand dropping will continue November & December
→ 2024/2025 interest rates will go down
→ Inventory will not correct the problem for a long time
→ When interest rates comes down, demand will surge & prices will go up
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks decreased by 13 homes, down 1%, and now sits at 2,340, its lowest reading since the start of July. It is the second lowest mid-September reading since tracking began in 2004, with only 161 more homes than 2021, the lowest level by far. In September, 37% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,114 less. Last year, there were 3,646 homes on the market, 1,306 more homes, or 56% higher. The 3-year average before COVID (2017 to 2019) was 6,400, or 173% more, nearly triple.
- Demand, the number of pending sales over the prior month, decreased by 60 pending sales in the past two weeks, down 4%, and now totals 1,414, the lowest end-of-September reading since 2007. Last year, there were 1,598 pending sales, 13% more than today. The 3-year average before COVID (2017 to 2019) was 2,262, or 60% more.
- With demand falling faster than the supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 48 to 50 days in the past couple of weeks, its highest level since the end of January. It was 68 days last year, slower than today.
- For homes priced below $750,000, the Expected Market Time increased from 30 to 33 days. This range represents 17% of the active inventory and 25% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time decreased from 33 to 31 days. This range represents 15% of the active inventory and 25% of demand.
- For homes priced between $1 million and $1.25 million, the Expected Market Time increased from 35 to 36 days. This range represents 11% of the active inventory and 15% of demand.
- For homes priced between $1.25 million and $1.5 million, the Expected Market Time increased from 40 to 47 days. This range represents 10% of the active inventory and 10% of demand.
- For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 55 to 59 days. This range represents 14% of the active inventory and 11% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks decreased from 98 to 92 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 181 to 171 days. For homes priced above $6 million, the Expected Market Time increased from 247 to 260 days.
- The luxury end, all homes above $2 million, account for 33% of the inventory and 14% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.3% of all listings and 0.1% of demand. Only four foreclosures and two short sales are available today in Orange County, with six total distressed homes on the active market, up two from two weeks ago. Last year, six distressed homes were on the market, identical to today.