Orange County Housing Report: Seller Competition
April 8, 2019
This is the time of the year when more sellers come on the market than any other time of the year.
More Seller Competition: The active listing inventory is rising.
Isn’t it beautiful? Southern California hills are spectacularly adorned in a blanket of bright orange California Poppies. The record rainfall resulted in a “super bloom” like nobody can remember. People are venturing outside to capture the incredible site, hiking and taking selfies along the way. Spring is definitely here!
The record rainfall kept many homeowners from entering the fray and placing their homes on the market. Yet, the deluge of rain is now in the past. That was during the winter, but spring has arrived in housing as well and there is nothing keeping owners from pounding FOR SALE signs in their front yards.
Nearly a third of all homes that are placed on the market during the year occur from April through June. There has already been an uptick in the number of homes coming on the market within the last couple of weeks. As a result, the active listing inventory in Orange County grew by 5%, adding an additional 344 homes. It now sits at 6,876 homes, its highest level since mid-November of 2018.
Right now, it is the best time of the year to sell a home in terms of buyer demand. Demand is currently increasing as well, growing by 4% in the past two weeks. It will peak by mid-May. Yet, even with increasing demand, it does not mean that the market is getting hotter. In fact, what you see is what you get. The market will not improve any more than where it is today. This is due to the fact that while demand is rising, so is the active listing inventory. The inventory is rising slightly faster than demand. The added seller competition is offsetting any improvement in demand.
In looking at the Expected Market Time for Orange County (that is the number of days from coming on the market to opening escrow), it has dropped like a rock from the beginning of the year, transitioning from a slight Buyer’s Market to a Balanced Market to a slight Seller’s Market, where it stands today.
For those sellers holding their collective breath in anticipation of a hot Spring, that is not going to occur. Instead, it will be a lukewarm housing market. The current Expected Market Time of 84 days is the highest level for this time of the year since 2011.
It is quite simply not as hot as prior years. Sellers still get to call the shots, but when the market does not move as quickly, home prices do not move as quickly as well.
Sellers need to understand that the market is not going to get better. In fact, by mid-May it will start to slow. That is when demand starts to drop with all the distractions of graduation and summertime. The inventory continues to rise until peaking sometime in July to August. With slightly dropping demand and increasing seller competition in the form of a rising active listing inventory, the Expected Market Time will grow and the market will slow.
The key for sellers is to realistically price their homes right now versus waiting down the road to get realistic when the market is slowing.
Active Inventory: In the past couple of weeks, the active inventory increased by 5%.
Last year at this time there were 4,708 homes on the market. That means that there are 46% more homes available today. This is the highest level of homes on the market for this time of the year since 2011.
Demand: In the past couple of weeks, demand increased by 4%.
Luxury End: The luxury inventory is climbing faster than luxury demand.