February 10, 2019
After three months of a slight Buyer’s Market, Orange County housing has moved back to a Balanced Market.
Back to Balance: With rising demand, the housing market transitioned to a Balanced Market.
Let’s paint a picture. It is the end of the school year and time for thousands to graduate from college and embark on the next chapter in their lives. Arenas and stadiums across the country will bestow degrees to young adults eager to make their mark on the world. Their heads are filled with the highest expectations: instant job offers, the job of their choice, and an attractive salary. Then, reality sets in. They move back in with their parents. Their résumé is distributed to a myriad of companies, but there is no instant offer. Finally, after months of looking, they stumble upon an entry level position that pays very little. It all boils down to unrealistic expectations.
Similarly, sellers in 2019 are experiencing the plight of unrealistic expectations. Many are coming on the market expecting a hot Seller’s Market in the spring like 2012 through 2018: instant offers, instant success, full price offers, and buyers tripping over themselves to purchase their home. That is just not the Spring Market in 2019. Like college graduates, it all boils down to unrealistic expectations.
The Spring Market is officially here. Now that the New England Patriots have clinched yet another Super Bowl victory, the housing market moves to THE very best time of the year to sell a home, from now through the end of April. That is three months of perfect market conditions, rising demand and not as much seller competition. The Expected Market Time (the amount of time it will take to list a home today and place it into escrow down the road) drops to its lowest level of the year and remains there through April.
Buyer demand peaks in May and slowly drops from there. At the same time, the active inventory rises as more homeowners opt to come on the market from May through July. With falling demand and a rising inventory, the Expected Market Time rises. It continues to rise until it peaks, customarily between July and August. Last year, it did not peak until ringing in a New Year because demand dropped considerably while the active inventory continued growing until the end of October.
For the next three months it is the best time to sell a home. In the past couple of weeks, demand jumped by 25%, normal for this time of the year, while the active inventory remained nearly the same. As a result, the Expected Market Time dropped from 128 days, a slight Buyer’s Market, to 102 days, a Balanced Market.
Right now, the Orange County housing market is a Balanced Market, noticeably different than past seven years when it leaned heavily in favor of sellers. That is when sellers called the shots and prices climbed. Many sellers are eagerly coming on the market now anticipating a hot Seller’s Market once again; instead, they are encountering today’s Balanced Market. Homes are sitting on the market longer. There are markedly fewer showings. Success is determined by the sellers who accurately price their homes and pack their patience. The market no longer provided instantaneous success with multiple offers. Only homes that are nicely upgraded, show like a model, and are priced well fly off the market. They are the exception, not the rule.
The market is not going to get much better than where it is today, balanced. It will most likely remain balanced throughout the Spring Market.
Active Inventory: In the past couple of weeks, the active inventory decreased by 22 homes.
Demand: In the past couple of weeks, demand increased by 25%.
Luxury End: Luxury demand jumped by 33%.