There isn't a single active property on the market in Canyon Crest right now...That is crazy! 

Before 2020, there might have been 12-20 active properties in our wonderful community. Similar to the rest of Mission Viejo, Orange County, and most of the country, our community is seeing an inventory shortage, unlike anything we have seen in quite some time.

What does that mean? The seller holds ALL the power. Buyers can't buy what doesn't exist. As a result, buyers are gobbling up any property as soon as it comes on the market provided one key requirement is met: The home is priced at a fair market value according to its condition in comparison to similar properties

With non-existent inventory and plenty of buyers wanting to live in Canyon Crest, there is ample opportunity for homeowners to cash in on all the equity that has accumulated over the past few years and beyond. Sellers will achieve success if they prepare their homes properly for sale and price it at fair market value. (And if they work with The Swan Team, of course!)

See for yourself what is going on in the Canyon Crest market:

What's currently for sale?

Spoiler Alert: There are NONE!

What properties are in escrow (under contract or pending)? 

Click here to see properties that are currently in escrow

What properties have sold in the past 60 days? 

Click here to see properties that have sold in the past 2 months

Many of you have asked, “But where am I going to go?” That is a very good question. It is also something I can help with. Contact me now to create a comprehensive plan of where you are, where you want to go, and how we are going to get you there.

I don't merely market, list, and sell your home. I am a consultant who helps you understand your options, helps create a plan that accounts for your particular wants and needs, and then executes the plan with a precision that exceeds your expectations. 

If you are thinking of selling your house in the next 2 years, please contact me. Now may be the best time to get the most return on your investment. Call me at 949-444-1601 to find out more information and get the ball rolling.

If you’re thinking about selling your house, you should know the number of homes for sale right now is low. That’s because, this season, there are fewer sellers listing their houses for sale than the norm.

Looking back at every April since 2017, the only year when fewer sellers listed their homes was in April 2020, when the pandemic hit and stalled the housing market (shown in red in the graph below). In more typical years, roughly 500,000 sellers add their homes to the market in April. This year, we saw fewer than 400,000 sellers entering the market in April (see graph below):

While there are a number of factors contributing to this trend, one thing keeping inventory low right now is that many homeowners are reluctant to move when the mortgage rate they have on their current house is lower than the one they could get today on their next house. It’s called rate lock.

As a recent survey from Realtor.com explains, 56% of people who are planning to sell in the next 12 months say they’re waiting for rates to come down.

While this wait-and-see approach is right for some sellers, it also creates an opening for more eager sellers to jump in now.

If your current house truly doesn’t fit your needs anymore and you’re ready to move, don’t miss this chance to stand out. When fewer sellers are putting their homes up for sale, buyers will have fewer options, so you set yourself up to get the most eyes possible on your house. That’s why your house could see multiple offers as buyers compete over the limited supply of homes for sale – especially if you price it right.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Inventory levels are still at historic lows . . . Consequently, multiple offers are returning on a good number of properties."

Bottom Line

If you’re ready to sell now, beat the competition before it comes onto the market. If you do, your house should stand out and could get multiple offers. Let's connect to get you market ready.

In the spring of 2020, life changed for everyone. Public schools, private schools, daycare, universities, dine-in restaurants, sporting events, organized sports, concerts, movie theaters, trips to the mall, amusement parks, public pools, beaches, neighborhood parks, and travel were all put on hold. The COVID “stay at home” order affected nearly every aspect of daily life, including real estate. 

The California governor ordered the lockdown on March 19th. The initial shock of a worldwide pandemic not only deterred buyers from purchasing but also inhibited plenty of homeowners from selling their homes as well. In March, there were 25% fewer sellers than the 3-year average before the pandemic (2017 to 2019) in Orange County. In April, it rose to 49%. It then dropped to 24% fewer in May and 11% less in June. By July, more sellers came on the market than the 3- year average. There were 4,389 missing sellers from March through June, 28% less. 

Overall, in 2020, there were 1,795 missing sellers compared to the 3-year average, down by only 5%. In 2021, it was down by 6% or 2,297 sellers. In 2022, everything changed. COVID no longer had a grip on the country, yet the number of homeowners that decided to sell dropped substantially. An astonishing 22% fewer homeowners opted to sell, or 8,460 missing FOR-SALE signs. 

The swift, unprecedented rise in long-term mortgage rates in 2022 prevented homeowners from selling. They climbed from 3.25% in January to 4% in February, 5% in April, 6% in June, and eclipsed 7% in October. By year’s end, they settled at 6.5%. Many homeowners elected not to sell. They were locked into incredibly low fixed mortgage rates. According to the Federal Housing Finance Agency’s National Mortgage Database, 89% of Californians with a mortgage have a rate of 5% or lower, 71% have a rate of 4% or lower, and 29% have a rate of 3% or lower. Comparing monthly payments at 7.37% (the high water mark on October 20, 2022, according to Mortgage News Daily) to 3.25% at the start of 2020 is enlightening. The principal and interest payment on a $700,000 mortgage shot up from $3,050 in January to over $4,800 by the end of October, an additional $1,750 per month or $21,000 per year. 

If a homeowner sold and decided to purchase a replacement property, they would have had a much higher payment and, most likely, much higher property taxes. Thus, they had been staying put. The “hunkering down” trend that started in 2022 only deepened in 2023. In January, there were 45% fewer sellers, or 1,362 missing FOR-SALE signs. In February, there were another 984 missing signs, off by 45%. In March, it rose to 1,810 absent signs, or 46% less. And, in April, it grew to 1,983 fewer sellers, down by 49%, similar to April 2020, the month with the most missing sellers during the initial COVID lockdown. From January through April, there has been an extraordinary 6,551 fewer sellers compared to the 3-year average before the pandemic, 46% less. 

Based on the first four months of 2023, it is projected that there will be 18,100 missing sellers. Many homeowners would like to move for various reasons yet are staying put and enjoying their low fixed monthly payments. Their home may not be exactly what they desire, but they love their current loan. 

Many ask when more sellers will opt to place their homes on the market and finally sell. That will occur when mortgage rates drop to 5.5% or lower. The gap between many homeowners’ prevailing underlying fixed rates will eventually narrow enough to entice many to list their homes for sale. That is when the need to move will kick in. The need for a growing family to purchase a larger home. The need for empty nesters to downsize. The need to move closer to the kids. While many are already selling today, lower rates will bridge the gap, and the number of sellers will grow. Until then, the 2023 inventory will continue to be constrained. 

The active listing inventory increased by 23 homes in the past two weeks, up 1%, and now sits at 2,076 homes. Even with the slight rise, fewer homes are on the market than last year. This is the first time there are fewer than the prior year since April 2022. It is the lowest level to start May since tracking began in 2004. Typically, the inventory starts rising in January or February at the latest. This year it fell through mid-April, shedding 454 homes since the start of the year, down 19%. The inventory is having difficulty rising from today’s unbelievably low level. To buyers in the marketplace, it feels like they are competing for crumbs. This is due to the lack of sellers coming on the market, a trend that has only deepened since last year. With the spigot of new sellers turned down substantially, any new homes to hit the market will be bid on swiftly and thrown right into pending status, as long as sellers do not overprice. Expect the inventory to grow slowly from here until it peaks sometime over the summer between July and August. 

Last year, the inventory was 2,104, 1% higher, or 28 more. The 3-year average before COVID (2017 through 2019) is 6,002, an additional 3,926 homes, or 189% extra, nearly triple where it stands today. 

Homeowners continue to “hunker down” in their homes, unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage. The difference between their underlying rate and today’s prevailing rate is significant and precludes many homeowners from listing their homes for sale and moving to another house. This will continue until mortgage rates drop. For April, 2,037 new sellers entered the market in Orange County, 1,983 fewer than the 3-year average before COVID (2017 to 2019), 49% less. These missing signs counter any potential rise in the inventory. 

Demand, a snapshot of the number of new escrows over the prior month, increased from 1,663 to 1,706 in the past couple of weeks, up 43 pending sales, or 3%. Today’s level is still the lowest for an end to April since 2020, during the initial COVID lockdown. Demand is currently thwarted by the lack of affordability due to the high mortgage rate environment. Not everyone can afford to purchase, with mortgage rates bumping around the mid-6s. Since demand is a snapshot of the number of recent pending sales, the reading would be a lot higher if there were more homes to purchase. Quite simply, buyers cannot buy what is not available. Demand readings are dramatically impacted by the spigot of new homes on the market at about 50% of the normal flow. Currently, for every price range other than luxury, buyers are bumping into each other at open houses, they are competing against multiple offers, and many homes are selling above their asking prices. The housing market feels insanely hot because buyers are competing to purchase the few houses that come on the market. This will only grow substantially worse when mortgage rates drop further. As rates fall, bridging the gap between homeowners’ low underlying fixed rate and the current prevailing rate, more sellers will finally decide to sell. Yet, affordability will improve, and buyer demand will increase. The Orange County housing market is poised to continue at its insane pace for quite some time. There is seemingly no relief on the horizon. 

Last year, demand was at 2,154, 26% more than today, or an extra 448. The 3-year average before COVID (2017 to 2019) was 2,780 pending sales, 63% more than today, or an additional 1,074. 

With rising supply and demand, the Expected Market Time (the number of days to sell all Orange County listings at the current buying pace) remained unchanged at 37 days in the past couple of weeks, its lowest level since May 2022. At 37 days, the market is hotter than the 84- day level to start the year, but this is more of a function of a lack of supply and not record- breaking demand. Last year the Expected Market Time was 29 days, slightly faster than today, yet it was cooling fast due to increasing rates. The 3-year average before COVID was 65 days, a slower pace than today. 

In Summary
While sellers may have the advantage, but overpricing a home is futile. Homes with deferred maintenance or a poor location will be extremely challenging to sell without adjusting the price. Price a home according to its Fair Market Value based on condition, location, upgrades, amenities, and age. Multiple offers may be back, but sellers should not get overzealous. 

Interested in finding out how the market is fairing in your community? Want to know what your home is worth? Thinking of moving but don't know where to start?

Call or text us at 949-444-1601 or email info@theswanteamoc.com. We are here to help!

{A majority of this Real Estate Market Update is courtesy of Reports on Housing.}

If something is only as strong as its weakest link, then inventory is certainly holding the real estate market down. Inventory is low across all of Orange County. Open houses are bustling and buyers are wanting to buy now. 

There are just 3 active properties on the market in Canyon Crest right now - one that has been on the market for nearly 3 months, one that is 2 days old, and one that is just a day old. That is way too low. (Please note: if you watch the video from Canyon Crest Connection, the video was recorded prior to the newest listing coming on the market 12 hours ago when there were just 2 listings.)

Pre-2020 there were 12-20 properties on the market this time of year. There have been just 20 homes sold in Canyon Crest in the past year; 9 in the past 6 months. The median home price in Canyon Crest based on the past 6 months of sales is $1,575,000. The average days on market in Canyon Crest when looking at the mere 4 sales over the past 2 months is just 23 days, and all of Mission Viejo is at 25 days making it once again a HOT seller’s market.

However, the average homebuyer is different today. At this time last year, buyers were offering between $1.6M and $2.3M to secure their Canyon Crest dream home because interest rates kept their mortgage payments down. With interest rates around 6%, there is a much smaller pool of buyers who can afford homes above $1.6M. Those who can afford those home prices have less competition and can afford to be pickier. 

The key takeaway: PRICE APPROPRIATELY. 

With nearly non-existent inventory and plenty of buyers wanting to live in Canyon Crest, there is ample opportunity for homeowners to cash in on all the equity that has accumulated over the past couple of years and beyond. Sellers will achieve success in 2023 if they:

1. prepare their homes properly for sale and 
2. price at fair market value  

See for yourself what is going on in the Canyon Crest market:

What's currently for sale?

Click here to see properties that are currently active

What properties are in escrow (under contract or pending)? 

Click here to see properties currently in escrow

What properties have sold in the past 60 days? 

Click here to see properties that have sold in the past 2 months

What properties have sold in the past 6 months? 

Click here to see properties that have sold in the past 6 months

Many of you have asked, “But where am I going to go?” That is a very good question. It is also something I can help with. Contact me now to create a comprehensive plan of where you are, where you want to go, and how we are going to get you there.

I don't merely market, list, and sell your home. I am a consultant who helps you understand your options, helps create a plan that accounts for your particular wants and needs, and then executes the plan with a precision that exceeds your expectations. 

If you are thinking of selling your house in the next 2 years, please contact me. Now may be the best time to get the most return on your investment. Call me at 949-444-1601 to find out more information and get the ball rolling.

Prospective home buyers are perplexed at today’s competition to purchase, which will only amplify when rates drop in the future.

Mortgage Rate Projections

Many experts forecast mortgage rates to drop into the 5s by year’s end.

This year’s March Madness ended with an unexpected NCAA Championship matchup between San Diego State University (ranked 18^th before March Madness) and the University of Connecticut (ranked 10^th). Three teams made their first Final Four appearance. Not a single team was ranked #1, #2, or #3. The critical takeaway is that sometimes it is best to expect the unexpected. It does not always play out the way everyone thinks.

This year’s housing market is also playing out much differently than expected. Nobody anticipated buyers bumping into each other with very few available homes to purchase, throngs of buyers cramming into weekend open houses, and bidding wars that result in multiple offers and sales prices above their asking prices. With today’s high mortgage rate environment, values were expected to continue to fall throughout 2023. That is precisely what occurred in the second half of 2022 when mortgage rates continued to soar higher, buyer demand plunged, and the inventory climbed and peaked at its highest level in two years. But that all changed as the inventory plunged to crisis levels.

The high mortgage rate environment affected both supply and demand. Naturally, everyone anticipated that high rates would enormously impact affordability and weaken buyer demand. Yet, very few anticipated that high rates would inhibit so many homeowners from listing their homes for sale. During the first three months of 2023 in Orange County, 45% fewer homes were placed on the market, or 4,538 missing sellers. Homeowners are staying put and “hunkering down” because of their locked-in, low, monthly fixed mortgage payment. As a result, the inventory has dwindled, and the housing market has heated up substantially since January. The inventory has dropped from 2,530 in January to 2,142 today, a 15% drop. The 3-year average before COVID (2017 to 2019) was an increase of 15%, from 4,665 to 5,533. 

At this point, the lack of home sellers impacts the housing market more than diminished demand, which explains the return of multiple offers and sales prices above the asking prices. Where will the market go from here? It all depends upon mortgage rates. Experts have had a tough time anticipating the direction of rates as it is closely tied to inflation. The trend reveals inflation is slowing falling, but it could take more than a year to reach the Federal Reserve’s 2% core inflation target. To combat inflation, the Federal Reserve increased rates at its fastest pace since 1981. It appeared as if they were poised to continue to increase the Fed Funds rate even higher than anticipated this year until the collapse of Silicon Valley Bank, Signature Bank, and Silver Bank within a week in March. Before the bank failures, mortgage rates were just above 7%. Since then, rates have fallen and bounced between a high of 6.75% on March 21^st (according to Mortgage News Daily) and a low of 6.38% on March 24^th. They are at 6.44% today. The bank closures and the exposed pressures on banking have changed the outlook for mortgage rates, and many experts are now expecting a U.S. recession between the third and fourth quarters of 2023. 

Mortgage rates predictably fall when the economy slows, especially during a recession. Investors look to park their money long-term with safe investments, government bonds, and mortgage-backed securities (bundled home loans). As more and more investors flood these long-term investments, their rate of return drops, and mortgage rates drop. According to the average projection from Fannie Mae, the Mortgage Bankers Association, and the National Association of REALTORS, mortgage rates are anticipated to drop to 6.33% during 2023 Q2, drop further to 6.07% during 2023 Q3, and then drop below 6% to 5.79% during 2023 Q4. While forecasting mortgage rates is exceptionally challenging, one thing is certain: the Federal Reserve has attempted to slam on the economy's brakes through a series of short-term Federal Funds rate hikes. Eventually, the economy will decelerate further and likely enter a recession, and 30-year mortgage rates will fall. 

For a $1 million home with 20% down, the payment was at $5,322 just before the bank failures at the start of March when rates exceeded 7%. It dropped to around $5,057 today, slightly less than 6.5%, a savings of $265 per month, or $3,180 annually. At 6%, the $4,796 monthly payment becomes a monthly savings of $526, or $6,312 per year, compared to 7%. If rates plunge to 5.5%, the payment drops to $4,542, a monthly savings of $780, or $9,360 annually. 

As rates drop, affordability will improve, and buyer demand will rise. Stronger demand will heat the market further. The Orange County housing market is already hot, dipping from 84 days at the start of the year to 41 days today. The market is scorching for everything priced below $1.5 million. Eventually, rates will drop enough to encourage more homeowners to stop “hunkering down” and list their homes for sale. The issue is that 89% of Californians with a mortgage have a mortgage rate at or below 5%. Incredibly, 71% have a rate at or below 4%, and 29% are fortunate to be locked in at 3% or lower. Rates will need to drop to the mid-5s to unlock more sellers. 

The issue is that buyer demand reacts quicker to falling rates than homeowners who need more time to prep their homes for sale. This occurred in 2017 and 2019 and in the post-pandemic world of 2020 and 2021. In each of those years, market times dropped considerably during the last few months of the year. Typically, the housing market slows during the year’s final quarter and does not get hotter.

The window of opportunity to purchase is right now, before rates fall further, igniting demand. While the market may be unexpectedly hot right now, even with high rates, it can grow hotter with even more competition to purchase as rates eventually ease.  

The active listing inventory decreased by 26 homes in the past two weeks, down 1%, and now sits at 2,142 homes, its lowest level since April last year. Typically at this time of year, the inventory rises by 5%. The Orange County housing market is incredibly hot, not because demand is off the charts. Instead, there are not enough homes on the market today, and the lack of homes coming on the market is at crisis levels. The 3-year average number of homes placed on the market during the first quarter before the pandemic (2017 to 2019) was 10,094. This year, there were only 5,556 new sellers, 45% fewer, or 4,538 missing FOR-SALE signs. As long as rates remain high, this trend will continue to place a stranglehold on housing. Expect the inventory to rise slightly as more homes come on during the Spring Market, even at today’s muted pace. 

Last year, the inventory was 1,552, 28% lower, or 590 fewer. The 3-year average before COVID (2017 through 2019) is 5,533, an additional 3,391 homes, or 158% extra, two-and-a-half times more than today. 

Homeowners continue to “hunker down” in their homes, unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage. The difference between their underlying rate and today’s prevailing rate is significant and precludes many homeowners from listing their homes for sale and moving to another house. This will continue until mortgage rates drop. For March, 2,143 new sellers entered the market in Orange County, 1,346 fewer than the 3-year average before COVID (2017 to 2019), 39% less. These missing signs counter any potential rise in the inventory. 

Demand, a snapshot of the number of new escrows over the prior month, decreased from 1,567 to 1,560 in the past couple of weeks, down 7 pending sales, almost unchanged. Today’s level is slightly less than the 1,584 pending sales posted in 2020 during the initial lockdowns. Demand is substantially muted due to higher mortgage rates and unaffordability; however, the market is scorching for buyers currently attempting to isolate a home. It is not due to unbelievable demand. Instead, it is because there is nothing to buy. Buyers cannot buy what is not for sale. Even with muted demand, the remaining buyers face unfathomable competition. This is not a market for buyers looking for a “deal.” Some sellers approach the market with unrealistic expectations or initially price their homes out of bounds. For buyers, these are great homes to pursue as there is typically far less competition to purchase, and sellers who have been exposed to the market longer are more willing to negotiate. 

Last year, demand was at 2,286, 47% more than today, or an extra 726. The 3-year average before COVID (2017 to 2019) was 2,668 pending sales, 71% more than today, or an additional 1,108. 

With a falling supply and unchanged demand, the Expected Market Time (the number of days to sell all Orange County listings at the current buying pace) decreased from 42 to 41 days in the past couple of weeks, its lowest level since May 2022. At 41 days, the market is hotter than the 84-day level to start the year, but this is more of a function of a lack of supply and not record-breaking demand. Last year the Expected Market Time was 20 days, substantially faster than today, and home values were screaming higher. The 3- year average before COVID was 63 days, a slower pace than today. 

Bottom Line for Buyers: Interest rates coming down will create more competition for the few homes that are on the market, causing prices to rise as the years go by. So far this year, we have seen multiple offers on most properties. Buyers with aggressive offers are winning the bidding wars. Instead of waiting for rates to come down, be aggressive and get the property you want now. Then you can refinance in 6 months.

Bottom Line for Sellers: Lack of inventory is in your favor but buyers aren’t as foolish as they were this time last year. To maximize the profit on the sale of your property, spruce it up as best as possible and price it correctly (ie. According to fair market value). How do find out the fair market value for your home or what you need to do to maximize your sales price? Contact me at 949-444-1601 and I will help you from start to finish, ensuring your property shines and you make the most of your investment.

{Report courtesy of Reports on Housing}

There have been a lot of shifts in the housing market recently. Mortgage rates rose dramatically last year, impacting many people’s ability to buy a home. And after several years of rapid price appreciation, home prices finally peaked last summer. These changes led to a rise in headlines saying prices would end up crashing.

Even though we’re no longer seeing the buyer frenzy that drove home values up during the pandemic, prices have been relatively flat at the national level. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), doesn’t expect that to change:

“[H]ome prices will be steady in most parts of the country with a minor change in the national median home price.”

You might think sellers would have to lower prices to attract buyers in today’s market, and that’s part of why some may have been waiting for prices to come crashing down. But there’s another factor at play – low inventory. And according to Yun, that’s limiting just how low prices will go:

“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”

As you can see in the graph below, we’ve been at or near record-low inventory levels for a few years now.

That lack of available homes on the market is putting upward pressure on prices. Bankrate puts it like this:

“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”

If more homes don’t come to the market, a lack of supply will keep prices from crashing, and, according to industry expert Rick Sharga, inventory isn’t likely to rise significantly this year:

“I believe that we’re likely to see low inventory continue to vex the housing market throughout 2023.”

Sellers are under no pressure to move since they have plenty of equity right now. That equity acts as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. And with many homeowners locked into low mortgage rates, that equity cushion isn’t going anywhere soon.

With so few homes available for sale today, it’s important to work with a trusted real estate agent who understands your local area and can navigate the current market volatility.

Bottom Line

A lot of people expected prices would crash this year thanks to low buyer demand, but that isn’t happening. Why? There aren’t enough homes for sale. If you’re thinking about moving this spring, let’s connect. Call us at 949-444-1601 or email info@theswanteamoc.com.

The Federal Reserve has raised the Fed Funds rate at an unprecedented pace. Mortgage rates skyrocketed to levels not seen in years. As a result, the housing market is broken. 

A national news podcast announced yesterday that home values have dropped for the 7th month in a row. After hearing about falling home prices due to sky-high mortgage rates, buyers expect housing to be slow so they can take their time and not compete in purchasing a home. Instead, they are experiencing long lines of buyers at open houses and multiple offers on homes priced right and in reasonably good condition. Home buyers are frustrated once again. 

Ever since mortgage rates climbed above 6% in June, there has been a tug-of-war taking place between buyers and sellers: low demand, which favors buyers, pit against a low supply, which favors sellers. Last year, inventory kept growing until it peaked in August, while demand continued to drop after peaking in March with rising rates. Market times rose from 19 days in March to 45 days in June to 72 days in July. By November, the market time reached 89 days, drastically different than the first five months of the year. As market times grew, buyers had the upper hand. The pool of buyers evaporated due to affordability constraints. The remaining buyers were not tripping over each other to purchase, they were unwilling to overpay for a home, and the few houses on the market took longer to sell. The sense of urgency that characterized the market from June 2020 through May 2022 had vanished. According to the Freddie Mac House Price Index, as of January, the Los Angeles/Orange County region has dropped 8% since May and was down 2% year-over-year. 

In January 2022, there were 1,100 homes available, and demand, the last 30 days of pending sales activity, was at 1,295. Demand was higher than the supply of available homes, and the market time was less than 30 days for all of Orange County. It was insanely hot, with way too much buyer competition, multiple offers, and sales prices way above the asking prices. With rising rates, the supply increased rapidly while demand was falling. In May, demand was less than the supply, which is normal. The difference between supply and demand grew. At the end of July 2022, demand dropped to 1,693 pending sales, and the inventory had reached 4,041. Supply was 2,348 higher than demand, the largest gap in 2022. 

The housing market has evolved yet again in 2023. The supply of available homes has been dropping while buyer demand has risen. The inventory declined from 2,530 homes in January to 2,168 today, a drop of 14%. On the other hand, demand has grown from 900 pending sales in January to 1,567 today. The difference between supply and demand has diminished from 1,630 in January to 601 today, its smallest difference since May last year. The market time dropped from 84 days in January to 42 days today, its lowest level since May 2022. Anything below 50 days indicates that not enough homes are available to purchase. 

Two-thirds of Orange County cities have an Expected Market Time of less than 50 days. Rancho Santa Margarita has the lowest market time at 13 days, with only 16 available homes and demand at 36 pending sales. All homes below $1.5 million have a market time below 40 days. The fastest price range is homes between $500,000 and $1 million, with a market time of only 28 days. 

At 42 days, Orange County buyers are once again experiencing long lines of buyers at open houses, multiple offer situations, and sales prices above the asking price. This is not due to heightened demand. High mortgage rates are inhibiting demand. Instead, it is a result of not enough new sellers and a muted inventory. So far this year, in January through February, there have been 2,793 missing FOR-SALE signs compared to the 3-year average before COVID (2017 to 2019), down 45%. Today’s buyers cannot buy what is not for sale, so buyers in today’s marketplace are waiting for homes to be placed on the market. As soon as a home becomes available, if it is in decent shape and priced right, it will be greeted with plenty of buyer traffic and interest. 

A WARNING FOR SELLERS: This is NOT the insane market from June 2020 to May 2022, where values were screaming higher. Sellers may have the advantage, but overpricing a home is futile. Homes with deferred maintenance or a poor location will be extremely challenging to sell without adjusting the price. Price a home according to its Fair Market Value based on condition, location, upgrades, amenities, and age. Multiple offers may be back, but sellers should not get overzealous. 

Interested in finding out how the market is fairing in your community? Want to know what your home is worth? Thinking of moving but don't know where to start?

Call or text us at 949-444-1601 or email info@theswanteamoc.com. We are here to help!

{A majority of this Real Estate Market Update is courtesy of Reports on Housing.}

The real estate market has rebounded a bit. Hooray! Days on market in Orange County have been cut in half to 42 days from 89 days at the end of 2022. Inventory is low across all of Orange County. Open houses are busier and buyers are wanting to buy now. My most recent listing in Pacific Hills had showings for 3 days and received 5 offers. The key to multiple offers:

1. Getting your property spruced up to sell
2. Pricing it appropriately

Right now there are just 4 active properties on the market in Canyon Crest. That is actually more in comparison to the past couple of years. However, in the big scheme of things, that is still very low inventory. (Pre-pandemic there would be 12-20 properties on the market this time of year.)

If you look at the homes still active on the market, they are all priced at $1,574,000 and above. If you look at the 3 homes that have sold in the past 2 months, they all sold at $1,575,000 or below. I feel this is pretty telling. At this time last year, buyers were offering between $1.6M and $2.3M to secure their Canyon Crest dream home. With interest rates around 6%, there is a much smaller pool of buyers who can afford homes above $1.6M. Those who can afford those home prices have less competition and can afford to be picky. 

The key takeaway: PRICE APPROPRIATELY. 

With nearly non-existent inventory and plenty of buyers wanting to live in Canyon Crest, there is ample opportunity for homeowners to cash in on all the equity that has accumulated over the past couple of years and beyond. Sellers who prepare their homes properly for sale and price at fair market value will achieve success in 2023.

See for yourself what is going on in the Canyon Crest market:

What's currently for sale?

Click here to see properties that are currently active

What properties are in escrow (under contract or pending)? 

There are none right now

What properties have sold in the past 60 days? 

Click here to see properties that have sold in the past 2 months

If you are thinking of selling your house in the next 2 years, please contact me. (Yes, I said the next 2 years.) Now may be the best time to get the most return on your investment. Need help determining how your home compares? That is where I come in!

I don't merely market, list, and sell your home. I am a consultant who helps you understand your options, helps create a plan that accounts for your particular wants and needs, and then executes the plan with a precision that exceeds your expectations. Call me at 949-444-1601 to find out more information and get the ball rolling.

Mortgage Rates - Not only do they affect buyers, but they also impact the number of sellers.

Just about everyone loves the beach. Basking in the sun, walking along the coast, listening to the soothing sounds of waves crashing on the shore, and taking a refreshing plunge in the cool, salty water, are some of the many reasons so many head to the beach, especially on the weekend. Yet, what happens when it is overcast and cool during the winter? Not as many Southern Californians make the pilgrimage to the beach. There are still plenty of beachgoers when it is cool, from die-hard surfers in their winter wetsuits to locals taking a walk or jogging on the sand. Still, there is a definitive difference between the hot summer days and the crispy winter weather with the wind blowing and temps in the 50s. There are times when beaches seem almost deserted. 

Similarly, when mortgage rates are low, the market heats up with a rise in affordability and buyer demand, along with a surge of homeowners desirous of taking advantage of a great time to make a move. Yet, when mortgage rates substantially rise as they did over the past year, demand diminishes due to affordability constraints, and many sellers opt to “hunker down” as they enjoy their underlying, locked-in, low fixed-rate mortgages. 

The pandemic was an enormous disruptor, and housing benefited profoundly due to the involvement of the Federal Reserve and the Federal Government. The Fed brought the Federal Funds Rate to zero and bought trillions of dollars of both mortgage-backed securities and treasuries. Mortgage rates dropped to record low levels, instigating tremendous housing demand. The Federal Government passed stimulus packages that sent checks directly to United States citizens. Bank accounts swelled and enabled many buyers to achieve their dream of homeownership. Mortgage rates remained at unbelievably low levels, and housing benefited with a nearly instantaneous, insanely hot market that lasted for two years, from June 2020 to May 2022. That is when the Federal Reserve stepped in and started hiking rates and reducing the number of mortgage-backed securities on their books. Mortgage rates soared, and the Fed slammed on the housing market’s brakes. 

In 2022, mortgage rates started the year at about 3.25%, according to Mortgage News Daily, and surpassed 7% in both October and November. It was a constant erosion of purchasing power for buyers looking to purchase. Last year’s giant jump in rates had a significant impact on affordability. For example, buyers desirous of a $4,000 per month principle and interest payment with 10% down started the year looking at a $1,021,111 home. By October, with rates above 7%, the same buyer was looking at a $665,000 home.

Understandably, rising rates sideline many buyers. Yet, since November, mortgage rates have remained below 7% with duration, inviting many buyers to begin their search for a home again. They averaged 6.3% in December, 6.2% in January, and 6.5% thus far in February. Recently, a series of positive economic reports, which is not helpful in the Fed’s inflation fight, has resulted in rising rates, reaching 6.87% today.

Nonetheless, as the economy eventually slows, mortgage rates are anticipated to fall. As they fall, affordability will improve, and demand will rise. In looking at that same desired $4,000 monthly payment, a drop from 7% to 6% allows a buyer to increase their search from a $667,778 home to one at $741,111. Rates could reach 5.5% in the summer if inflation falls and the economy cools, which would allow that buyer to broaden their search to $782,222. As rates drop, affordability improves, allowing more purchasers to enter the housing arena. 

Higher rates sideline many sellers as well. Some homeowners would like to move but choose to “hunker down” and stay put instead. Their current underlying low, fixed-rate mortgage is preventing them from selling. Since 89% of all California homeowners with a mortgage have a rate at or below 5%, and 71% have a rate at or below 4%, the higher rate environment limits the number of sellers coming on the market. In Orange County in 2022, there were 22% fewer sellers, or 8,500 missing FOR-SALE signs due to the hunkering downtrend. In January, there were 45% fewer sellers, or 1,375 missing signs. That is a big chunk of the housing market. As rates drop, the gap between a homeowner’s underlying rate decreases. When rates eventually drop below 5.5%, that gap will narrow enough to entice many homeowners to sell, and fewer homeowners will continue to hunk down. 

The missing sellers have resulted in a falling inventory despite lower demand levels. Demand, the last month of pending sales activity, is at 1,537, readings last seen during the April 2020 lockdowns of the pandemic. Yet, there are only 2,305 homes available today, an anemic reading well off the 3-year pre-pandemic average for mid-February (2017 to 2019) of 4,834 homes, more than double where it stands today. As a result, the market feels exceptionally hot even with higher rates with an Expected Market Time, the time between listing and successfully negotiating a contract to sell, of only 45 days. The 3-year pre-COVID average was 63 days. Today’s hotter market is a function of the low supply and fewer homeowners coming to market, not record-breaking demand. 

Mortgage rates pave the path for housing. Substantially higher rates have been limiting supply and demand, constraining the number of closed sales. As rates drop, demand rises, more homeowners opt to sell, and more closed sales will occur. 

The active listing inventory decreased by 110 homes in the past couple of weeks, down 5%, and now sits at 2,305 homes, its lowest level since April of last year. The inventory typically climbs slowly in February. The 3-year pre-COVID average (2017 to 2019) was a 3% rise. The inventory is following the post-pandemic trend in 2021 of a declining inventory to start the year. Surging demand is only slightly to blame for the decreasing supply. Instead, the lack of homes coming on the market is the main culprit for the anemic supply. In January, 1,680 new sellers came on the market in Orange County, 1,375 fewer than the 3-year average before COVID (2017 to 2019), 45% less. These missing sellers are preventing the inventory from meaningfully growing. In March, as housing transitions into the Spring Market, more sellers will come on the market, but it will be muted as homeowners continue to “hunker down,” unwilling to move due to their current underlying, low fixed-rate mortgage. 

Last year, the inventory was 1,358, 41% lower, or 947 fewer. The 3-year average before COVID (2017 through 2019) is 4,977, an additional 2,672 homes, or 116% extra, more than double today. 

Bottom Line: Sellers - Right now is a great time to sell your home if you are willing to sell at fair market value. 

Buyers - Properties that are priced appropriately and in relatively good condition will likely get multiple offers in the first 5 days of being active. Be prepared to put your best foot forward when making an offer and be aggressive.

A majority of this Real Estate Market Update is courtesy of Reports on Housing. For more detailed information about a specific area, contact us at info@theswanteamoc.com or 949-444-1601.

I'm not going to sugarcoat it - the second half of 2022 was rough for sellers, listing agents, buyer's agents, appraisers, mortgage lenders, and the real estate market in general.

With 2022 in the rearview mirror, we can finally get excited about what is going on in 2023. Even though it has been cold lately (for Southern California standards), the real estate market has already begun to heat up this month. Observations I have noticed thus far: 

• Mortgage rates have remained stable and are currently in the low 5% range (clients with well-established relationships with particular banks are getting even lower rates)
• Homes priced appropriately are getting multiple offers. Not 30 but at least a handful of offers.
• As a result, homes priced appropriately are going under contract in a short time  -1 home in Canyon Crest went under contract in 14 days and another in just 3 days.

The key takeaway: PRICE APPROPRIATELY. 

Right now there is just one active property on the market in Canyon Crest. With nearly non-existent inventory and plenty of buyers wanting to live in Canyon Crest, there is ample opportunity for homeowners to cash in on all the equity that has accumulated over the past couple of years and beyond. Sellers who prepare their homes properly for sale and price at fair market value will achieve success in 2023.

See for yourself what is going on in the Canyon Crest market:

What's currently for sale?

Click here to see properties that are currently active

What properties are in escrow (under contract or pending)? 

Click here to see properties that are currently in escrow

What properties have sold in the past 60 days? 

Click here to see properties that have sold in the past 2 months

If you are thinking of selling your house in the next 2 years, please contact me. (Yes, I said the next 2 years.) Now may be the best time to get the most return on your investment. Need help determining how your home compares? That is where I come in!

I don't merely market, list, and sell your home. I am a consultant who helps you understand your options, helps create a plan that accounts for your particular wants and needs, and then executes the plan with a precision that exceeds your expectations. 

Contact me now and get the best team in the business working for you!