Orange County Housing Report: The Price is Right
May 20, 2019
Sellers have until the end of July to get their homes into escrow, indicating that the price better be right.
Pricing: Expired listings are up 64% so far in 2019, illustrating how crucial pricing is this year to avoid becoming another statistic.
Spring is in the air and so are the community garage sales. There is a real strategy behind a successful garage sale. For the amateur trying to overcapitalize on their used possessions, they often overprice and miss the opportunity to cash in on the most optimal time of the sale, the first two hours. Everybody seemingly gets sucked into the emotions behind their personal belongings. This emotional attachment leads to asking way too much. After a steady stream of uninterested buyers because of the quoted price, the amateur salesperson lowers it. Yet, the wave of initial buyers has already passed, and the steady stream diminishes to a trickle. Desperate to sale, the price is lowered yet again, attempting to avoid carting everything back to the garage and attic.
This scenario plays out over and over again on the housing front as well. Sellers frequently ignore their professional REALTOR® and price a home arbitrarily based upon emotion, or what they need out of a home in order to move on. It is challenging to see all of the deferred maintenance, lack of upgrades, an inferior location, or a small lot size, when a seller is living LIFE in it. Home is where the children are raised. First steps, first time riding a bike, first tooth for the Tooth Fairy, first day of school, first dance, there are a lot of “firsts” in a home, a collection of memories that tug at our heartstrings.
Ignoring the expert on pricing advice is understandable, but unfortunate. The best advice is to lean into their years of experience and understanding of current market conditions, trends, and pricing strategies. The emotions behind pricing must be removed to find success. A buyer’s lens is much different. They do not want to inherit deferred maintenance. They want to see upgrades. The location and lot size are important considerations. Most importantly, buyers are not willing to overpay for a home, especially in 2019.
The active listing inventory is at its highest level since 2011. There are 29% more homes on the market compared to last year. With more inventory, the number of unsuccessful sellers is escalating.
The chances of finding success has dropped substantially. Pricing a home accurately is more important today than in years. The Expected Market Time is at 84 days today, nearly a month longer than a few years ago. The Expected Market Time is a factor of both supply and demand. There is a lot more seller competition with the extra supply; and, demand is muted as well.
How should sellers approach the housing market? The best approach is to be sure to lean into the expert, the real estate professional, and price a home according to its Fair Market Value. This is determined by condition, upgrades, and location. The REALTOR® will be able to pull their emotion out of a home and objectively arrive at the price that will result in a sale. The second step is to be patient.
How should buyers approach the housing market? Remember, it is NOT a Buyer’s Market. It is not even a Balanced Market. Currently, it is a slight Seller’s Market. That means that when a home is accurately priced, it will generate buyers’ interest. Lowball offers will only result in wasting everyone’s time. Jump on homes that match your specified criteria and are priced according to their Fair Market Value.
Active Inventory: In the past couple of weeks, the active inventory surpassed last year’s peak and will continue to climb.
Demand: In the past couple of weeks, demand was nearly unchanged
Luxury End: The luxury market continued to slow.