Orange County Real Estate Market June 2020

Here are a few FACTS about the Real Estate Market in Orange County for first week of June, 2020

Demand, the number of new pending sales over the prior month, increased from 1,622 to 2,035, an additional 413 pending sales, up an incredible 23% in just two weeks. In the past 4-weeks, demand has added 863 pending sales, a 74% rise. With mortgage rates dropping to 3.15%, an all-time record low, more buyers are entering the market, eager to take advantage of extremely favorable home affordability. Expect demand to continue to increase as more inventory comes on the market.

Last year, there were 611 more pending sales than today, 23% extra. In mid-April, at the low point of the COVID-19 pandemic, demand was off by 60% year over year. The year over year gap is narrowing as the market continues to heat up.

In the past two-weeks the Expected Market Time dropped from 90 to 74 days, a slight Seller’s Market (between 60 and 90 days), where sellers get to call more of the shots during the negotiating process, yet home values are not changing much. Last year the Expected Market Time was at 85 days, slower than today.

  • The active listing inventory increased by 177 homes in the past two-weeks, up 4%, and now totals 5,044. In the past four-weeks, 33% fewer homes were placed on the market compared to the prior 5-year average; thus, COVID-19 is suppressing the inventory. It was 54% fewer four-weeks ago. Last year, there were 7,479 homes on the market, 2,435 more than today, a 48% difference.
  • Demand, the number of pending sales over the prior month, increased by 413 pending sales in the past two-weeks, up 25%, and now totals 2,035. It has grown by 74% in only 4 weeks. COVID-19’s effect on housing is rapidly diminishing. Last year, there were 2,646 pending sales, 23% more than today.
  • The Expected Market Time for all of Orange County decreased from 90 days to 74, a slight Seller’s Market (between 60 and 90 days). The drop was due to the surge in demand outpacing the rise in the supply. It was at 85 days last year, slower than today.
  • For homes priced below $750,000, the market is a hot Seller’s Market (less than 60 days) with an expected market time of 53 days. This range represents 35% of the active inventory and 50% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 56 days, a hot Seller’s Market. This range represents 19% of the active inventory and 25% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 83 days, a slight Seller’s Market (between 60 and 90 days).
  • For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 129 to 98 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 158 to 116 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 368 to 258 days. For luxury homes priced above $4 million, the Expected Market Time decreased from 540 to 455 days.
  • The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 15% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.8% of all listings and 0.9% of demand. There are only 16 foreclosure s and 22 short sales available to purchase today in all of Orange County, 38 total distressed homes on the active market, down 4 from two-weeks ago. Last year there were 65 total distressed homes on the market, slightly more than today.
  • There were 1,712 closed residential resales in April, 34% fewer than April 2019’s 2,599 closed sales. This is entirely due to COVID-19 suppressing both supply and demand. April marked a 28% drop compared to March 2020. The sales to list price ratio was 98.3% for all of Orange County. Foreclosures accounted for just 0.3% of all closed sales, and short sales accounted for 0.4%. That means that 99.3% of all sales were good ol’ fashioned sellers with equity.

Returning to a Balanced Housing Market in Orange County

For years, sellers have been in control of the housing market. Multiple offers were generated almost instantaneously after hammering in the FOR SALE sign. Homes flew off the market in the blink of an eye. Frustrated buyers had to cut back their expectations after writing offer after offer with no success. It felt like housing was unstoppable and would continue its relentless climb. That is until the spring of 2018.

This year has been all about the evolution of housing from a brisk paced, hot, Seller’s Market to a much more normal, Balanced Market. The trouble is nobody really remembers a “normal” market. It is where homes must be priced well, or they will sit. There is no room for error. In a hot seller’s market, homeowners get away with stretching their asking prices. With very little inventory and heated demand, buyers were willing to pay extra just to secure their piece of the “American Dream.”

Today, housing is much more balanced, a market that does not favor sellers or buyers. Overprice and sit. Sellers that pad the price to leave room for negotiations will sit. Sellers who ignore their professional REALTOR® and arbitrarily pick a price, will sit. Ignore real estate fundamentals like location, condition, and upgrades, and sellers will be stuck without success.

An unbelievable 37% of all homes on the active listing inventory have been exposed to the market for more than 60-days. That is high considering 39% of the active listing market has come on within the last 30-days. Of course, everyone

expects Sellers in the luxury ranges to play the waiting game; however, many sellers in the most affordable price ranges are sitting on the market and waiting as well. Below $500,000, it is 28% of the market. Between $500,000 and $750,000, it is 24% of the market. About a third of all sellers between $750,000 and $1 million have been on the market for over two months. From there, the share of sellers who have been waiting to find success grows, from 40% to 68%.

For the rest of the year, the percentages will just grow in every price range. That is because housing is now transitioning into the Autumn Market. This season of real estate begins with the kids going back to school. It is no longer the most advantageous time for families to move, so many would be buyers stop their search for the time being. On average, demand drops by 11% from the end of August to the start of October. With less demand, there are fewer sellers who are able to find success. As a result, more sellers find themselves sitting and waiting.

With both the Spring and Summer Markets in the rear-view mirror, many sellers realize that the best time of the year to sell is now in the past. For the remainder of the year, carefully pricing is absolutely crucial. There will be more homeowners this year who will not be able to isolate a buyer willing to purchase and their contracts to sell will expire. In the real estate trenches, they are called “expired listings.” Expect the number of expired listings this year to spike compared to the rest of the housing run.

Sellers have a choice: price their homes according to the Fair Market Value or throw in the towel and pull their homes off of the market. It sounds simple, but many sellers quite simply cannot get out of their own ways, unwilling to listen to the real estate experts and do what it takes to achieve their goals in selling.

Buyers need to be aware that while it is no longer a hot seller’s market, it is not a buyer’s market either. Looking for a “deal” is a waste of time. They too need to look at offering to purchase at a home’s Fair Market Value. Anything less, and they will not be successful in securing their piece of the “American Dream.”

Charming Detached Home in Rancho Santa Margarita Under $650,000!

It is a tight market in Orange County right now, especially in the under $750,000 price range. This beauty may be just the right property for you!

Property is located at 6 Paseo Fucsia, Rancho Santa Margarita, CA, and is listed at $649,900. It features an open, light-filled floor plan of almost 1500sf, 2 bedrooms PLUS an optional third bedroom, currently used as loft/office with built-ins, two full baths plus downstairs guest bath and a direct access two-car garage.  Formal living and dining, spacious eat-in kitchen with full-size laundry closet, master bed and bath upstairs with dressing area, walk-in closet, all clean and well-maintained.

One of the best features of the home is the private patio with fountain right off the eat-in kitchen that can also be enjoyed from the living room. with fireplace. Property is well-located within walking distance to schools, shops and entertainment with easy access to toll road. It is so easy to live here!

Call me for more details and a private showing 949.525.5905.

April 2018 Orange County Real Estate Info

The active inventory increased by 4% in the past two weeks.

The active listing inventory continued to climb in the past two weeks, adding an additional 189 homes, up 4%, and now totals 4,609. The active inventory is increasing at its fastest pace since 2014. It will continue to climb as the market moves deeper into the Spring Market, and will climb through the summer, peaking sometime between July and August.

After starting the year with 674 fewer homes compared to the start of 2017, 12% fewer, the year over year difference has drastically diminished. Today, there are only 107 fewer homes compared to last year, a 2% difference.

Demand increased by 5% in the past two weeks.

Demand, the number of new pending sales over the prior month, increased by 121 pending sales over the past couple of weeks and now totals 2,538, a 5% rise. The last time demand was above the 2,500 pending sale level was back in September 2017. The Spring Market is in full bloom and demand will continue to rise, peaking sometime between April and May.

Last year at this time, demand was at 2,664 pending sales, 126 more than today, or 5%. The number of pending sales has dropped this year because of a serious lack of inventory of homes priced below $750,000. This price range is significant as it represented 62% of all closed sales in 2017. So far this year, there has been 12% fewer homes that have come on the market below $750,000. The lack of homes in the most affordable price ranges has seriously undermined potential demand.

The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow down the road, decreased slightly from 55 to 54 days in the past two weeks, a hot, seller’s market. Last year at this time, the expected market time was at 53 days, very similar to today.

The luxury inventory and luxury demand increased in the past couple of weeks.

In the past two weeks, demand for homes above $1.25 million increased from 343 to 353 pending sales, up 3%. The luxury home inventory increased from 1,704 homes to 1,797, up 5%. From here, expect both demand and the inventory to rise throughout the Spring Market. The current expected market time for all homes priced above $1.25 million increased from 149 to 153 days over the past two-weeks.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 78 to 88 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 149 to 142 days. For homes priced between $2 million and $4 million, the expected market time increased from 193 days to 202. In addition, for homes priced above $4 million, the expected market time decreased from 338 to 296 days. At 296 days, a seller would be looking at placing their home into escrow around mid-January 2019.