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With all the distractions of the holidays now in the rearview mirror, the housing market is about to heat up as demand soars and market times fall.
Regardless of the economic situation, without fail housing revs its enormous economic engine and the market heats up during the Winter Market, from mid-January to mid-March. Last year the inventory of available homes hit a record low and by mid-January, there were only 1,080 homes on the market. By mid-March, the start of the Spring Market, the inventory had grown to 1,556, a small addition of 476 homes, yet a 44% rise from January. Demand rocketed higher and increased from 1,426 pending sales at the start of the Winter Market to 2,284 in March, up 60%, or an additional 860. The Expected Market Time decreased from an insanely hot 23 days in January to an even hotter 20 days by spring.
Demand will increase substantially from now through mid-March. Today’s 939 demand reading may be similar to Great Recession levels, but it will nonetheless explode higher from here. There will be more activity. More buyers will pull the trigger and purchase, especially if rates continue to slowly fall. The lower rates fall, the more demand will climb. Many buyers who stopped their search for a home during the holidays will be ready to resume their search again.
With the inventory slowly rising and demand surging higher, the Expected Market Time will fall and housing will feel a lot hotter. Right around the Super Bowl is when the conditions are often the best for sellers. There is limited inventory, which is only slowly growing, along with rapidly increasing demand and falling market times. These conditions are turning up the heat for Orange County housing.
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 6 homes, nearly unchanged, and now sits at 2,536, the second lowest level in mid-January since tracking began. In December, there were 32% fewer homes that came on the market compared to the 3-year average before COVID (2017 to 2019), 483 less. Last year, there were 1,080 homes on the market, 1,456 fewer homes, or 57% less. The 3-year average before COVID (2017 to 2019) was 4,640, or 83% more.
- Demand, the number of pending sales over the prior month, increased by 39 pending sales in the past two weeks, up 4%, and now totals 939. Last year, there were 1,426 pending sales, 52% more than today. The 3-year average before COVID (2017 to 2019) was 1,349, or 50% more.
- With demand rising and the supply not changing, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, decreased from 84 to 81 days in the past couple of weeks. It was 23 days last year, much stronger than today.
- For homes priced below $750,000, the Expected Market Time increased from 62 to 63 days. This range represents 24% of the active inventory and 30% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time decreased from 69 to 59 days. This range represents 21% of the active inventory and 28% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time decreased from 73 to 72 days. This range represents 11% of the active inventory and 13% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time decreased from 79 to 77 days. This range represents 10% of the active inventory and 10% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 117 to 127 days. This range represents 12% of the active inventory and 7% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks decreased from 144 to 116 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 238 to 245 days. For homes priced above $6 million, the Expected Market Time increased from 518 to 882 days.
- The luxury end, all homes above $2 million, account for 19% of the inventory and 9% of demand.
- Distressed homes, both short sales, and foreclosures combined, made up only 0.4% of all listings and 0.6% of demand. There are only 5 foreclosures and 6 short sales available to purchase today in all of Orange County, 11 total distressed homes on the active market, down 4 from two weeks ago. Last year there were 2 total distressed homes on the market, similar to today.