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Your March Market Update

The current Orange County housing market is scorching hot. Once again, buyers are tripping over themselves to purchase. Homes that hit the market are fetching multiple offers within the first couple of days. When a home is priced at or close to its Fair Market Value, the purchase price is often higher than the asking price. This is the nature of a housing market with very little inventory and very high demand.

The expected market time (the amount of time it would take for a newly listed home today to be placed into escrow) for all of Orange County is now at 50 days. When the expected market time drops below 60 days, the market is considered a solid seller’s market with steady price appreciation. Last year, Orange County was only below the 60-day threshold for about eight weeks, from mid-March through mid-May. It appears as if 2017 is going to be much hotter than the last few years.

When the expected market time dips below 30 days, the market shifts to a sizzling hot seller’s market with rapid price appreciation. In the past decade, the overall housing market has never reached this level, but many price ranges have. That is the case today as well. Condominiums and detached homes priced below $500,000 are sizzling. This range represents 15% of the active listing inventory and 29% of demand.

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Condominiums priced between $500,000 and $750,000, and detached homes priced between $500,000 and $1 million, are considered “solid” seller’s markets with expected market times between 30 and 60 days. They represent 24% of the current active inventory and 36% of demand. Both condominiums and detached homes priced between $500,000 and $750,000 are knocking on the door of a sizzling hot seller’s market with expected market times just above the 30-day threshold. That price range is starting to feel very hot and could easily drop below 30-days in the coming weeks.

Condominiums priced between $750,000 and $1 million and detached homes priced between $1 million and $1.5 million are currently experiencing a slight seller’s market, between 60 and 90 days. They represent 18% of the active listing inventory and 12% of demand. A slight seller’s market is characterized by slow, methodical price appreciation.

The market does not lean in the seller’s favor for detached homes priced above $1.5 million and condominiums priced above $1 million. The higher the price, the slower the market. They represent 30% of the inventory and only 9% of demand.

Buyers and sellers alike need to understand the market that they are working with in order to approach it with proper expectations. A buyer looking to purchase a $650,000 home is going to encounter a much different market than a buyer looking to purchase a $2 million home. Similarly, a condominium seller at $450,000 is going to experience a much different market than a condominium seller at $800,000.

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Since January 1st, the active inventory has only grown by 389 homes. Within the past couple of weeks, it remained almost the same, growing by only 12 homes and now sits at 4,460. Once again, nearly everything that is coming on the market at or close to its Fair Market Value is being placed into escrow almost immediately.

The combination of a limited supply of homes coming on the market and ferocious demand has created the current sizzling hot Orange County housing market. More and more homeowners will come onto the market this spring through mid-August. Last year at this time, there were 5,271 homes on the market, 15% more. Two years ago, there were 973 more homes on the market, or 18% more.

The only thing holding back current demand is the lack of supply of homes. There are simply not enough new sellers coming on the market. Even with very few choices right now, buyers are pouncing on everything new that hits the market that is reasonably priced and in decent condition.

Demand, the number of homes placed into escrow within the prior month, increased by 248 pending sales in the past couple of weeks, or 10%, and now totals 2,651. With an increase in demand and an inventory that remained the same, the expected market time dropped from 56 days to 50 days, a solid seller’s market. Last year at this time, there were 2,584 total sales, 67 fewer than today, or 3% less.

The Steven Thomas Report

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