August 24, 2020 / By Steven Thomas
The housing market is firing on all cylinders and it appears as if the Autumn Market is going to be the hottest in years.
With a low supply, fierce demand, low mortgage rates, and a strong demographic of first-time buyers, the housing market is on strong footing.
It is that time of the year. There are Halloween costumes at Costco. The kids are back in school, online for now. Mornings are a lot darker with the sun rising later. The official start to autumn is not until Tuesday, September 22, but signs are beginning to emerge that the seasons are about to change.
As for Orange County housing, the Autumn Market typically starts at the end of August when the kids head back to school. With the Spring and Summer Markets in the rearview mirror, many families back off their pursuit in purchasing a home. Similarly, fewer homeowners enter the fray and many unsuccessful sellers pull their homes off the market. With the kids back in school, the timing just is not the best for families.
Yet, 2020 has been nothing close to ordinary or typical. What should have been the Spring Market, March through May, turned into one of the slowest springs in memory. The “Stay at Home” order and initial shock and anxiety of the Coronavirus kept buyers from buying and homeowners from selling. As the real estate industry adapted becoming an essential service, and the shock of the virus that included social distancing, sanitizing, and dawning a mask waned, housing surged. The Summer Market became the Spring Market in 2020. It appears as if the Autumn Market is going to be the Summer Market in 2020, not quite as hot as June, July, and August, but still quite busy with homes flying off the market and generating multiple offers. All signs point to an extraordinary September, October, and first half of November.
Supply and Demand: The active listing inventory is at its lowest August level since tracking began in 2004, and current demand is at its highest level since 2012. Year over year, the active inventory is down by 41% and demand (the number of pending sales over the prior month) is up by 30%. For Orange County, the low supply and feverish demand has paved the way for an overall Expected Market Time of 39 days, its lowest level of the year and the best reading since 2013. Anything below 60-days is considered a Hot Seller’s Market with tons of showing, multiple offers, and strong sales prices.
Affordability: Record low mortgage rates is fueling today’s remarkable demand. With rates dropping below 3%, it is having a significant impact on affordability.
Demographics: Millennials have surpassed Baby Boomers as the largest living adult generation. The demographics are lining up that favor an increase in home buyer demand.
The Bottom Line: the low supply, strong demand, increased affordability, and a strong demographic patch all are the foundation of an exceptionally hot Autumn Market. It will feel like 2020’s Summer Market.
The current active inventory decreased by another 3% in the last two weeks.
Demand increased by 1% in the past two weeks.
The luxury market continued to improve with a drop in the supply and a rise in demand.