December 18, 2016
Even in the Holiday Market, there are hot price ranges where homes fly off the market.
Hot Markets in Orange County: Regardless of the time of year, there are areas, price ranges, and properties that are extremely hot.
The Holiday Market has officially arrived for housing in Orange County. There are fewer and fewer homes on the market every day. The active inventory has dropped 32% since September. As a result, demand has dropped considerably as well, 27%. With very limited activity now, January and February are notoriously the leanest months for closed sales.
The slow Holiday Market will only begin to thaw after the first few weeks of the New Year and does not really find its legs until after the Super Bowl, around mid-February.
Yet, there are stories today of homes hitting the market and instantaneously receiving a steady stream of buyer activity, multiple offers, and bidding wars ensue. That is happening today, in the midst of all of the holiday hoopla. If it is the Holiday Market, the slowest time of the year, then how can some homes be generating so much activity?
It’s all about price.
Homes and condominiums that are priced in the lower ranges are HOT, even today. For detached homes, that is anything below $750,000. For condominiums, it’s anything priced below $500,000. And, it is hot in areas and cities where more of the housing stock is located in the lower ranges as well.
Take a look at Aliso Viejo, for example, where there are only 44 homes on the market today for potential buyers to view, and demand (the number of pending sales over the prior month) is at 51 pending sales. With a low inventory and strong demand, the expected market time is at 26 days. An expected market time below two months is considered extremely HOT, a deep seller’s market. In Orange County, there are 15 cities and areas that fall within this sizzling classification. What do they all have in common?
They all have an averages sales price that can be found in the hotter lower ranges.
The Aliso Viejo example has an average price of $538,000. In those 15 cities and areas, the highest average sales price is Fountain Valley at $719,000, still within the hotter, lower ranges. As the average sales price creeps higher, so does the market time. Huntington Beach has an expected market time of 67 days and an average sales price of $789,000. That’s still a seller’s market, just not as hot.
Homes with average sales prices above $1 million are experiencing a much longer expected market time. The expected market time is 158 days, a little over 5 months.
The bottom line is this: homes and condominiums located within the lower price points are HOT in spite of the time of the year. WARNING: only properties that are priced right, in good condition, and are nicely upgraded, will fly off the market.
Luxury End: Luxury demand dropped by 3% and the inventory dropped by 7%.
In the past two weeks, demand for homes above $1 million decreased from 367 to 355 pending sales, a 3% drop, and its lowest level since the end of January. For homes priced between $1 million to $1.5 million, the expected market time in the past couple of weeks decreased from 101 days to 94 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 188 days to 193 days. For homes priced above $2 million, the expected market time decreased from 296 days to 279 days. Based upon today’s supply and demand for luxury homes with an expected market time of 279 days, a seller is looking at placing their home in escrow around the end of September of 2017.
Active Inventory: In the past couple of weeks, the active inventory dropped by 7%.
Due to the timing of the year, the active inventory dropped by 388 homes, or 7%, in the past couple of weeks and now totals 4,789, its lowest level since mid-January. In the past month, the inventory has shed 866 homes, 15%. Fewer sellers are coming on the market and many unsuccessful sellers are throwing in the towel after being exposed to the market for months.
Demand: In the past month, demand dropped by 15%.
Demand, the number of new pending sales over the prior month, decreased from 2,116 to 1,984, a drop of 132, or 6%. That’s the second biggest drop of the year and its lowest level since the end of January. Two week ago was the biggest drop. This is the time of year where demand slows considerably.
With a giant drop in both the active inventory and demand, the expected market time only dropped slightly from 73 days to 72, still a slight seller’s market.