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It is the telling of two different markets, the incredibly hot lower price ranges due to low inventory versus the sluggishness of the luxury market and longer market times.
With an Expected Market Time of 168 days, nearly six months, the luxury housing market in Orange County is much slower than the lower ranges.
The sluggishness of luxury today still feels a lot like a buyer’s market. Yet prices are not falling in the upper ranges. Luxury prices do not fall much at all when the market decelerates like it has this year because sellers stick to their guns and do not adjust their asking price as often as the lower ranges. Most high-end sellers state that they “don’t have to sell.” It is common for homes to sit for a very long time without a price reduction.
For most luxury sellers, it takes a lot longer to sell their homes successfully. There are a limited number of buyers looking for a luxury home. Sellers with the best price, terms, condition, location, and upgrades will stand out among the competition.
The market is split between luxury and the rest of the market. Luxury expectations should not be for instantaneous success, even with the right price. While it may be true for buyers looking to purchase a detached home below $1 million, there is not a line of buyers waiting to pounce on the next luxury home to come on the market. Instead, these sellers should focus on the data, statistics, and information that will help them navigate the more challenging luxury end.
What we know:
→ Lower end market still relatively active
→ Higher end started cooling November
→ Our area has been busy all year for homes under 1.5
→ Showings decrease, but prices don't fall
→ Sellers holding out until spring
→ No price reductions unless have to get it sold
→ Buyers have opportunities
→ Sellers willing to negotiate more 4th quarter
→ December is a difficult month for realtor to make predictions
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks plunged by 129 homes, down 6%, and now sits at 2,180, its lowest level since May. In November, 33% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 743 less. Last year, there were 3,182 homes on the market, 1,002 more homes, or 46% higher. The 3-year average before COVID (2017 to 2019) was 4,988, or 129% extra, more than double.
- Demand, the number of pending sales over the prior month, decreased by 60 pending sales in the past two weeks, down 5%, and now totals 1,113, its lowest December level since tracking began in 2004. Last year, there were 1,133 pending sales, 2% more than today. The 3-year average before COVID (2017 to 2019) was 1,774, or 59% more.
- With supply and demand dropping at similar rates, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, remained unchanged at 59 days in the past couple of weeks. It was 84 days last year, slower than today. The 3-year average before COVID (2017 to 2019) was 87 days, also slower than today.
- For homes priced below $750,000, the Expected Market Time increased from 41 to 45 days. This range represents 19% of the active inventory and 26% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time increased from 38 to 42 days. This range represents 16% of the active inventory and 22% of demand.
- For homes priced between $1 million and $1.25 million, the Expected Market Time decreased from 44 to 36 days. This range represents 10% of the active inventory and 16% of demand.
- For homes priced between $1.25 million and $1.5 million, the Expected Market Time decreased from 44 to 39 days. This range represents 8% of the active inventory and 12% of demand.
- For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 68 to 65 days. This range represents 12% 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 increased from 115 to 122 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 240 to 213 days. For homes priced above $6 million, the Expected Market Time decreased from 444 to 372 days.
- The luxury end, all homes above $2 million, account for 35% of the inventory and 13% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.4% of all listings and 0.2% of demand. Only five foreclosures and four short sales are available today in Orange County, with nine total distressed homes on the active market, up one from two weeks ago. Last year, 12 distressed homes were on the market, similar to today.