OC Home Inventory Shrinking

Over the past few weeks as we have worked with several buyer clients there has been a very noticeable trend. One that is not unfamiliar. The home inventory is not plentiful to say the least. The interesting part is that there is no tax incentive in place like there was two years ago when inventory levels were last at these levels. However, interest rates are remarkably lower. 

Orange County’s housing market speed — by one measure — quickened 21.9% in the past two weeks and sped up 34.7% in a year. The latest Orange County home inventory report from Steve Thomas and ReportsOnHousing.com — data as of February 2 — includes these thoughts …

Typically Super Bowl Sunday marks the beginning of the Spring Market. I would argue that the housing market is experiencing an early spring that started in mid-January. Could it be the warm weather that is stimulating demand? Record low interest rates? Experts declaring that a bottom has been reached? It’s probably a case of “all of the above,” plus a bit of optimism going into a New Year. Regardless, the housing market has absolutely surged and it is not due to a first time home buyer tax credit or other government program. … Overall, demand, the number of new pending sales over the prior month, is up 13% compared to 2011, and now totals 3,134 pending sales. In the past two weeks alone, demand increased by 24%. For homes priced below $500,000, demand is up 26% compared to last year and the expected market time is a sizzling 1.9 months. For homes priced above $500,000, demand is actually less than one year ago; however, that is mostly due to a much smaller inventory compared to last year. In looking at the expected market time for various ranges, with the exception of homes priced between $1.5 million and $4 million, the market is stronger today compared to last year.

Thomas’ signature housing measurement is his “market time” benchmark. It tracks how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this Thomas logic, as of February 2 — we see …

Article Tab: Real estate: Demand for Orange County homes surges 24% in 2 weeks
Real estate: Demand for Orange County homes surges 24% in 2 weeks
Photo by Justin Sullivan/Getty Images
  • Market time of 2.50 months for Orange County buyers to gobble up all homes for sale at the current pace vs. 3.20 months two weeks ago vs. 3.82 months a year ago vs. 2.42 months two years ago.
  • Of the 8 Orange County pricing slices Thomas tracks, 8 had faster market time vs. 2 weeks ago; and 6 improved over a year ago.
  • Orange County homes listed for under a million bucks have a market time of 2.18 months vs. 7.85 months for homes listed for more than $1 million.
  • So, basically, it is 3.6 times harder to sell a million-dollar-plus residence!
  • And just so you know, the million-dollar market represents 18% of all homes listed and 6% of all homes that entered into escrow in the past 30 days.

Here’s the recent data for listings; deals pending; market time in months; latest vs. 2 weeks earlier, a year ago and 2 years ago. Color coding for market time is red (slowed by 5%-plus in year); green (sped up by 5%-plus in year); and yellow (in between!) Note: k=thousand; m=million …

Slice Listings Deals Market Time (months) 2 week ago 1 yr. ago 2 yr. ago
$0-$250k 1,504 727 2.07 2.67 3.31 1.72
$250k-$500k 2,782 1,529 1.82 2.40 3.24 1.63
$500k-$750k 1,491 538 2.77 3.54 3.74 2.60
$750k-$1m 688 172 4.00 4.79 4.56 3.52
$1m-$1.5m 510 106 4.81 6.27 5.62 4.41
$1.5m-$2m 296 34 8.71 9.00 7.20 10.63
$2m-4m 375 30 12.50 16.17 12.37 18.28
$4m+ 224 9 24.89 226.00 138.50 29.70
All O.C. 7,823 3,134 2.50 3.20 3.82 2.42

Coverage of other data reports from Thomas ARE HERE!

Source = OC Register

The bottom line: As a buyer in this market you have to be ready and able to move quickly when you find a suitable house. At the very least being ready means the following:

  • You have spoken to a reputable lender and have a preapproval letter dated within the last 30 days.
  • You can provide a bank account or other proof of liquid funds to cover all necessary closing costs and down payment.
  • Willingness to see a property within the first 1-2 days it has been listed even if it means taking time off of work. We’ve seen well priced properties sell in less time in this market.
Your ability to act quickly can mean the difference in getting that dream house or missing out. Of course, finding an agent that is ready, willing and able to guide you through this process is key as well. That’s where we come in. We serve Orange County and the surrounding areas.
Home prices are back to 2002 levels. The major difference is instead of rates being in the mid 6’s like they were in 2002 they are now in the high 3’s to low 4’s. If you are even considering buying in this market start by using our years of experience and let us help you put a plan together that matches your goals. Call or email for a FREE consultation with no obligation.
Dustin Wise
The Wise Team
Keller Williams Realty
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