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Despite the high mortgage rate environment eroding home affordability, home values in Orange County have been on the rise after bottoming in December.
Today’s lack of supply and stabilized higher mortgage rate environment has resulted in an extremely hot real estate market that favors sellers in the negotiation process. For all homes priced below $1.5 million, the market is NUTS with an Expected Market Time of less than 40 days. Homes priced at or near their Fair Market Value are being inundated with buyer showings and receiving an avalanche of multiple offers within the first couple of weeks and often days. They are selling at or above their asking prices. Upon writing an offer, buyers quickly find that they are one of many, sometimes over ten offers on a home.
The inventory is about to hit its cyclical peak between July and August, not much time for the inventory to grow. After reaching a peak, the inventory will slowly and methodically decline through the end of the year. As a result, the pressure and trend for home values to rise on a monthly basis will continue at a slow pace. Orange County home values are on the rise.
June averages last year:
→ 387 homes closed to date
→ 15 days on market
→ Home size 2,400 sf
→ List price $1,787,000
→ Sales price $1,825,000
→ Price per sf $769
→ Overbidding
June averages this year:
→ 263 homes closed to date
→ 40 days on market
→ Home size 2,400 sf
→ List price $1,786,000
→ Sales price $1,750,000
→ Price per sf $753
→ Seeing the effect of high interest rates
→ Lower demand, more negotiating
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 85 homes, up 4%, and now sits at 2,281. Regardless, it is the lowest level for an end to June since tracking began in 2004. In May, 45% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,879 less. Last year, there were 3,491 homes on the market, 1,210 more homes, or 53% higher. The 3-year average before COVID (2017 to 2019) was 6,633, or 191% more, nearly triple.
- Demand, the number of pending sales over the prior month, increased by 7 pending sales in the past two weeks, nearly unchanged, and now totals 1,602, the lowest level for an end to June since tracking began in 2004. Last year, there were 1,861 pending sales, 16% more than today. The 3-year average before COVID (2017 to 2019) was 2,679, or 67% more.
- With the supply rising, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 41 to 43 days in the past couple of weeks. It was 56 days last year, slower than today and rapidly cooling as rates were rising.
- For homes priced below $750,000, the Expected Market Time increased from 28 to 29 days. This range represents 18% of the active inventory and 27% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time increased from 27 to 28 days. This range represents 15% of the active inventory and 23% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time increased from 30 to 32 days. This range represents 11% of the active inventory and 14% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time decreased from 35 to 31 days. This range represents 10% of the active inventory and 13% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 50 to 51 days. This range represents 13% 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 76 to 89 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 163 to 131 days. For homes priced above $6 million, the Expected Market Time increased from 274 to 435 days.
- The luxury end, all homes above $2 million, account for 34% of the inventory and 12% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.3% of all listings and 0.1% of demand. Only two foreclosures and five short sales are available today in Orange County, with seven total distressed homes on the active market, down one from two weeks ago. Last year there were five distressed homes on the market, similar to today.