We are in the midst of a very unique real estate market in Orange County generally and Talega in particular. Our pricing peak for homes going under contract was in March of this year, right before interest rates began a steep climb over the next 90 days and priced a lot of buyers out of the market.
Earlier this year, the overall economy was shifting, and buyers started pulling back from their real estate purchases. Overbidding all but stopped and the flow of buyers moving from the Bay Area and LA dramatically slowed. Most felt that these conditions were setting the real estate market up for a major correction. The market has made a price adjustment of approximately 5% to 12% lower than comparable March sales, depending on the area. However, many prospective buyers feel prices will fall further. What seems to be preventing this from happening is that inventory is low, and homes are not coming on the market as people expected. Additionally, interest rates have stabilized and even improved over the past 3 weeks.
As I write this article, there are only 19 active properties in Talega, 13 in escrow and just 5 that had closed escrow in the last 30 days. Nineteen active listings is very low for Talega, which typically sees 45 to 60 active listings in a balanced market. Considering there were only 5 closed sales in the past 30 days, it is easy to see how much the market pace has slowed. Buyers are sitting on the fence waiting for prices to go lower or interest rates to improve. Sellers are still holding on to the dream of achieving March’s lofty prices but slowly learning the reality of a shifted market. Hence, we are in a waiting game.
I would expect Talega’s new adjusted price point will tend to hold at this level rather than falling further if inventory remains low. We are heading towards the holidays when active listing levels drop. Demand will also slow as school begins and buyers become more anchored in their locations. Sales will continue to happen for those that need to buy or sell, but for a large portion of our market, it will remain a waiting game as there are no strong indications that this market is tanking or setting up to go through the roof again. We are, simply, back to normal.