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Where Are The Sellers?

Bloomberg exclaims how homebuyers face bidding wars on “scarcer-than-ever” U.S. listings. CNBC describes spring housing as the “strongest seller’s market ever.” The Wall Street Journal reports that U.S. home resales spiked to hit a 10-year high. It’s no wonder homeowners are listing their homes with high expectations.

Bloomberg, CNBC, and The Wall Street Journal are all reporting on the national market. They are illustrating how there is no inventory, that homes are generating multiple offers, and that home prices are rising through the roof on a national level. Orange County follows suit in many of these factors, and the local median sales price for a home is $665,000, far above the national average.

A seller’s market occurs when the expected market time is below 90 days. A sizzling hot seller’s market is when the expected market time falls below 60 days. The overall market in Orange County is currently at 54 days, red-hot. In Orange County, luxury housing (defined as the top 10% of recent closed sales) starts at $1.25 million. With the exception of homes priced between $1.25 million and $1.5 million, the upper ranges are actually within “Buyer’s Market” territory. When the expected market time, the amount of time it would take to place a home into escrow if it were listed FOR SALE today, exceeds 120 days, it is considered a buyer’s market.

This chart illustrates how the market slows as the price ranges rise. Homes that are more expensive take a lot longer to sell. This is simply because there are fewer and fewer potential buyers that can afford a home as prices rise. There is pent up demand with not enough homes on the market within the lower ranges. That’s why they entertain multiple offers and home values have been on the rise. Yet, homes in the upper ranges sit and often do not find success. Many luxury homes remain on the market for months, and, in some cases, years.

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Active inventory increased by 2% in the past couple of weeks. The active inventory has not been growing as fast as it had a month ago, but it is still on the rise. The inventory added an additional 124 homes in the past two-weeks, a 2% increase, and now sits at 5,387. For this time of year, the inventory is at its lowest level since 2013. From here, we can expect the active inventory to continue to increase through mid-August where it will peak. Last year at this time, there were 6,000 homes on the market, 11% more than today.

Demand is still off by 6% compared to last year at this time. Demand, the number of homes placed into escrow within the prior month, only grew by 55 pending sales in the past month, or 2%, and now totals 3,012. Demand is above the 3,000 mark for the first time since June of last year. This should have occurred a month ago, but there simply have not been enough homes coming on the market below $500,000. Currently, there are 37% fewer homes on the market below $500,000 compared to last year. Last year at this time, there were 184 more pending sales totaling 3,196. Current demand is off by 6% compared to last year. The expected market time increased from 53 to 54 days in the past couple of weeks. Last year it was at 56 days, very similar to today.

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The Steven Thomas Report

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