Orange County Housing Report: Surf’s Up!!!
January 29, 2017
Hot Housing Market: With a very low supply and incredibly HOT demand, the conditions are perfect for selling.
Living in Southern California, “surf’s up” is a phrase used to describe when the waves at the beach are worth surfing. In describing the Orange County housing market and whether or not right now is a good time to sell a home, yes, “surf’s up!” If you are a homeowner who wants to sell, but you are waiting for the “Spring Market” because that’s when the conditions are “the best” for selling a home, there’s actually no need to wait. So, grab your surfboard, contact a professional REALTOR®, jump in the water, and start paddling to the swells… Surf’s Up!
After a slow start to housing due to very few homeowners placing their homes on the market at the beginning of the month, everything that is coming on the market now is flying off the market almost as quick as the “FOR SALE” sign is placed in the front yard. The only complaint in the real estate trenches is that there are simply not enough homes on the market right now.
Everything priced below $1.5 million is experiencing a HOT market, and it’s scorching below $750,000. The market run has officially hit the five-year mark, and this is the second best start behind the blazing hot 2013 market. Why are the conditions so favorable compared to the last few years? Current demand is extremely strong and the active inventory is at exceptionally anemic levels. Compared to last year, there are 11% fewer homes on the market right now, and 19% fewer than 2015; yet, demand (new pending sales over the prior month) is almost identical to 2016. And, today’s demand has been muffled with fewer homes coming on the market so far this year.
The expected market time (the time it would take to list a home today and then place it into escrow) dropped from 84 days two weeks ago to 67 days today. This is because the supply of homes actually dropped slightly while demand, new pending sales, exploded.
The only thing keeping demand from being even higher today is the lack of inventory. Sellers who are opting to sell now, versus waiting until later in the spring, are totally taking advantage of a market ripe for the pickings. As long as a home is priced closed to its Fair Market Value and is in good condition, it will fly off the market with multiple offers.
For those opting to “wait until the spring,” there will undoubtedly be more buyers looking to purchase, but there will also be an enormous increase in the number of sellers. With increased demand comes increased supply. Who knows what the market will be like in 90-days. With the new presidential administration, it is hard to predict where housing will be a few months from now. One thing is 100% certain, right now the conditions are perfect for selling. Cowabunga dude, surf’s up!!!
Active Inventory: Due to a spike in demand and fewer homes coming on the market, the inventory actually dropped a bit in the past two weeks.
Since January 1st, there have been 6% fewer homes that were placed on the market compared to last year at this time. Remarkably, there were 7% fewer homes last year compared to 2015. So, this year there are even more homeowners who are opting not to sell even though the conditions are perfect.
In the past two weeks, the active listing inventory has shed 56 homes, or 1%, and now totals 4,320. This is typically the time of year when more homes are finally coming on the market. The holidays are officially way behind us; it is time to for homeowners to shake off the holiday buzz and not opt to wait until the Spring Market, taking advantage of current wave of pent up demand. The lack of new sellers hitting the market could be due to a “wait and see” attitude regarding the new Trump administration. Regardless, there will be a significant increase in supply in February. Stay tuned…
Demand: Demand skyrocketed in the past couple of weeks.
As is typical for this time of the year, buyers are chomping at the bit and are eager to move on from the doldrums of the Holiday Market that brings very few choices and not a lot of fresh inventory. Buyers know that is about to change, even though it has been slow going for January.
Demand, the number of homes placed into escrow within the prior month, increased by 368 pending sales in the past couple of weeks, or 24%, and now totals 1,930.
Luxury End: Demand is way up, while the luxury inventory is only up slightly.
Demand is up for Orange County’s luxury home market with 46 additional pending sales compared to last year at this time; however, there is more competition. The luxury inventory is up by 65 homes. That extra competition translates to more seller who are not successful on a monthly basis. Also, a lot of the luxury activity is taking place within the $1 million to $1.5 million price range.
For homes priced between $1 million to $1.5 million, the inventory is down by 26 homes compared to last year, and demand is up by 33 pending sales. Yet, above $1.5 million, the inventory is up by 91 homes, and demand is up by only 13.
In the past two weeks, demand for homes above $1 million increased from 245 to 325 pending sales, a 33% rise, its highest level since mid-December. The luxury home inventory increased from 1,705 homes to 1,744, its highest level since mid-December as well. The expected market time decreased in the past couple of weeks from 209 to 165 days.
For homes priced between $1 million to $1.5 million, the expected market time in the past couple of weeks decreased from 147 days to 98 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 169 to 195 days. For homes priced above $2 million, the expected market time dropped from 370 days to 277 days. At 277 days, a seller would be looking at placing their home in escrow around the beginning of November.