Orange County Housing Report: Still a Hot Seller’s Market
December 17, 2017
Hot Housing Market: Year in and year out December is notoriously the slowest month of the year in terms of demand and new sellers placing their homes on the market; yet housing is still hot.
Nobody can escape it. The holidays are here. Office gatherings, friend gatherings, and family gatherings fill everybody’s calendars. The mall parking lots are full, mailboxes are filled with season’s greetings, and the temperature is finally beginning to drop. Seemingly, one and all are dialed into the season; so, how can housing still be red hot?
Even though Orange County housing is leaning heavily in the seller’s favor, the Holiday Market has arrived and December is notoriously the slowest month of the year in terms of new pending sale activity. There are fewer and fewer homes on the market every single day. The active inventory has dropped 31% since September. As a result, demand has dropped considerably as well, 34%. This is the time of year where both the active inventory and demand (recent pending sales) hits yearly lows.
The slow Holiday Market will only begin to thaw after the first few weeks of the New Year and does not really find its legs until after the Super Bowl, around mid-February. Until then, it will be more of the same, very few homes on the market and muted demand.
Yet, there are stories today of homes hitting the market and generating multiple offers within days. Ultimately, a bidding war ensues. It may be the holiday season, but homes that hit the market below $1 million will fly off the market as long as they are priced right and in excellent condition.
The hottest segments of the Orange County housing market are in the lower ranges and in areas that feature more homes in the lower end. For homes priced below $750,000, the expected market time (the amount of time it would take to list a home and then open up escrow) is at a staggering 39 days. For homes priced between $750,000 and $1 million, the expected market time grows to 58 days, still a pretty rock solid seller’s market. The vast majority of local housing activity takes place below $1 million, 81% of all closed sales so far this year in 2017. Above $1 million, the market slows considerably, especially during this time of the year, the higher the price, the slower the market.
The bottom line: in spite of the season, the housing market in Orange County is HOT in the lower ranges.
Active Inventory: The active inventory dropped by 15% over the past month.
The active listing inventory shed 300 homes in the past two weeks and now sits at 4,023, poised to drop below the 4,000 home mark for the first time since May 2013. Expect the inventory to continue to descend dramatically over the next couple of weeks and drop to its lowest point of the year as we ring in a New Year. The start to 2018 will be the second lowest start behind 2013.
Demand: Demand decreased by 19% over the past month.
In the past two weeks, demand, the number of new escrows over the prior month, decreased by 218 pending sales, or 10%, and now totals 1,864, dipping below 2,000 homes for the first time since the end of January of this year. Just like the inventory, demand is dropping like a rock right now. It will continue to drop until we ring in the New Year. On January 1st, demand will be at its lowest level for the year.
Luxury End: Both luxury demand and the luxury inventory dropped within the past couple of weeks.
In the past two weeks, demand for homes above $1.25 million decreased from 236 to 217 pending sales, down 8%. Luxury demand has dropped 33% since the start of November.