The holidays are here and with it come holiday parties, plenty of shopping, family gatherings, eggnog, spirits, and nonstop festive music. With COVID being much less of a distraction and a deterrent to enjoying the essence of the season, sellers and buyers are going to be even more inclined to place their real estate needs on pause.
The Holiday Market is when the inventory plunges, demand plunges, and the Expected Market Time increases slightly. Regardless of the economic situation, without fail the cyclical slowdown prevails. Last year the number of available homes was already at historically low levels all year. After peaking in July, a record low peak, it was hard to imagine the inventory could plunge at the end of the year. Yet, from mid-November to the start of the New Year, it sank by 39%. Demand, a snapshot of the number of new escrows over the prior month, dropped by 44%, and the Expected Market Time, the time between coming on the market and opening escrow, increased by a meager two days. Similarly, the 3-year average inventory holiday drop prior to COVID (2017 to 2019), when housing was a bit more normal, was a 20% decline. Demand dove by 44% and the Expected Market Time increased by an additional 19 days.
The inventory seasonally drops because not many homeowners come on the market at the end of the year. The fewest number of sellers enter the fray in December, 64% less than May, the peak month with the greatest number of new sellers. The second fewest come on in November, 46% less than May’s peak. In addition, many sellers who have not found success, mainly due to price, opt to throw in the towel and pull their homes off the market. The combination of those two forces, fewer new FOR-SALE signs and unsuccessful sellers, cause the inventory to plummet until the start of the New Year.
Demand, recent escrow activity, typically drops substantially as well. Many buyers who have been actively looking for a home wait on the sidelines for the right home to come along. Yet, with fewer new choices as the end of the year draws closer and many sellers throwing in the towel, there is a real lack of fresh inventory, no replenishment of available homes. Moreover, there are buyers who are simply ready to pause the home search process and divert their attention to enjoying all the trimmings of the holidays. For many, it simply is not the time to hunker down and tiresomely search for a home.
In the last two weeks of November the inventory has dropped by 8%, shedding 295 homes, the second largest drop of the year. There are only 3,286 available homes today, the second lowest end of November level behind last year. Demand increased, adding 10 pending sales, but it too is about to drop as fewer choices remain. The Expected Market Time dropped from 89 to 81 days, a bit better for the sellers who have opted to linger on the market during the holidays. It is still a far cry from the crazy market during the first four months of 2022 when the Expected Market Time reached a low of 19 days in March.
The holidays are here for the Orange County housing market. The housing needs of many will be placed on pause to enjoy all that this season brings. As a result, expect inventory and demand to plunge and market times to grow a little bit longer as housing moves through its slowest season of the year. Having said all of that, we do have buyer clients right now who have been very active in looking at properties, and have even been in a multiple offer situation on a property (a property that had been on the market for just 3 days, no less). Great properties are still selling quickly and there are still buyers sitting on the sidelines just waiting to pounce on their "dream" home.
And while everyone is shopping and celebrating over the next couple of weeks, buyers will become more active looking at properties online the last week of December and certainly many the first week of January. Many people make the pledge to themselves as they ring in the new year that this will be the year they buy that new home. If you are thinking of selling, now is the time to start planning, so you don't miss out on those eager buyers. Contact us at 949-444-1601 or email us at info@theswanteamoc.com so you can prepare to maximize your returns and we can exceed your customer service expectations.