Many buyers and sellers have been holding out, anticipating a shift in the market, but it appears home prices may not be changing anytime soon.
Many buyers and sellers have been delaying, hoping for a change in the market. Of course buyers want to see housing slow like it did in the last four months of 2018. They would love to see prices come down. Sellers are hoping the housing market can react like it did from 2012 through 2017 with rising prices. It appears neither change will happen in the foreseeable future. What we see in the market today is likely to remain for the rest of the year. Home values and the pace of the market are not expected to change much. Some buyers are anticipating the end of the year will offer better home pricing. With inventory and interest rates at historic lows, economic forecasters are indicating home values will remain relatively level through December of 2019.
With the kids back in school, it is officially the Autumn Market. The busiest time of the year for real estate is behind us this year. Active inventory will likely contract through the rest of the year. In Orange County, the current active inventory peaked at the end of July with 7,601 homes on the market. It had grown by 29% since then beginning of the year. In the last month, the inventory has already dropped 4%, and now sits at 7,307. The Autumn Market sees fewer new listings. Combined with the delisting of homes that did not sell, active inventory shrinks. The closer we move to the end of the year, there will be fewer and fewer choices for home buyers, which is normal. Last year, home inventory grew during the fourth quarter as a result of rising rates that peaked at 5% – which is not normal. Current rates are now at a three-year low – 3.5% today. This year, inventory is going to do what it normally does this time of year – consistently drop through December. On average, home inventory drops 37% after reaching a peak during the Summer Market.
At the same time, buyer demand will also soften for the remainder of the year. The kids are back in school, and the holidays in November and December slow home buying. The 10 year average has seen a 35% change in home sales from August through the end of the year. With both supply and demand dropping at nearly the same rate, the velocity of the market will not change much. The Expected Market Time, the amount of time it would take from listing a home to placing it in escrow, has increased, on average, by only 2% from August through December during years where housing peaks during the summer. The current Expected Market Time is at 86 days. A 2% change would be an increase to 88 days, nearly unnoticeable.
Active Inventory: The current active inventory shed 181 homes in the past two-weeks.
In the past two-weeks, the active listing inventory dropped by 181 homes, down 2%, and now totals 7,307, the largest drop of the year. The significant drop illustrates the direction that the active listing inventory will be heading for the remainder of the year. There are fewer homeowners opting to list their homes during this time of the year and many unsuccessful sellers are throwing in the towel with the best time of the year officially in the rearview mirror.
Last year at this time, there were 7,001 homes on the market, 306 fewer, or 4% less. Two years ago, there were 20% fewer homes on the market compared to today.
Demand: In the past two-weeks, demand decreased by 2%.
Demand, the number of new pending sales over the prior month, decreased by 58 pending sales in the past two-weeks, down 2%, and now totals 2,548. With the kids back in school, demand slowly and methodically drops for the rest of the year. It is just not the most advantageous time for families to move. Most families prefer to move when it is easiest on the kids, during the summer months, from June through mid-August while their kids are enjoying their summer break.
Last year at this time, there were 198 fewer pending sales than today. Current demand is still muted, just not as severe as this time last year when interest rates were climbing. Two years ago, it was 11% stronger than today.
In the past two-weeks, the Expected Market Time remained unchanged at 86 days, a slight Seller’s Market (60 to 90 days), where home values do not change much, and sellers get to call more of the shots during the negotiating process. Last year, the Expected Market Time was at 89 days, a little slower than today.
Luxury End: The luxury market continued to improve in the past couple of weeks.
For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the Expected Market Time increased from 130 to 149 days.
Orange County Housing Market Summary:
•For homes priced below $750,000, the market is a hot Seller’s Market (less than 60 days) with an expected market time of 57 days. This range represents 38% of the active inventory and 57% of demand.
•For homes priced between $750,000 and $1 million, the expected market time is 74 days, a slight Seller’s Market. This range represents 19% of the active inventory and 22% of demand.
•For homes priced between $1 million to $1.25 million, the expected market time is 117 days, an even market.
•For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time increased from 130 to 149 days.
•The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 13% of demand.
•Distressed homes, both short sales and foreclosures combined, made up only 0.7% of all listings.
•There are only 20 foreclosures and 32 short sales available to purchase today in all of Orange County; just 52 total distressed homes on the active market
•There were 2,871 closed residential resales in July, 5% more than July 2018’s 2,734 closed sales. July marked a 6% increase compared to June 2019. The sales to list price ratio was 98.3% for all of Orange County.