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We're talking about what we in the real estate industry call the Holiday Market. Below is the latest from the Orange County Housing Report. For the most up-to-date market data, please Sign Up Now to receive real-time housing reports. We deliver the full/downloadable market reports and charts to your inbox every month.
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ORANGE COUNTY Housing Report | December 2018
Orange County Housing Report
Active Inventory: In the past month, the active inventory dropped by 11%.
Current Demand: In the past month, the current demand dropped by 15%.
Luxury Market: In the past two weeks, the luxury market cooled dramatically.
The Holiday Market is officially here! Orange County housing shifts to its slowest time of year, from Thanksgiving to after the New Year.
Orange County housing begins to slow during the Autumn Market, after the start of the school year. And then, it slows even more with the distractions of the holidays. And now, the holidays are here. Weekly parties, family gatherings, and holiday shopping - oh my!
For most home buyers, it is not the time to hunker down and tirelessly search for a home. For most home sellers, it is also not the time to go to market and list a home. The Holiday Market is the time of the year when typically both supply (active inventory) and demand (new pending sales) drop until after we ring in the New Year.
From Thanksgiving to December, 150 sellers placed their homes on "Hold Do Not Show" to begin the Holiday Season. With the Holiday Market comes Holiday Expectations for both Orange County home buyers and home sellers.
Expected Inventory – Expect inventory to continue to drop til New Year's.
After peaking two months later than normal, and then hovering around that peak for an additional month, the active listing inventory is finally dropping. It declined by 6% in the two weeks going into December, shedding 398 homes, and totaling 6,820, the highest level for this time of the year since 2011. Normally, the active inventory peaks sometime between July and August and then falls for the remainder of the year.
With the delayed peak, there is not as much time for the inventory to drop, so the start to 2019 is going to be the highest since 2012. The current active inventory was 58% higher than last year’s 4,323 mark at the start of December. With 2,497 more homes on the market, there is a lot more competition for sellers. Expect the active listing inventory to continue to drop until New Year’s Day, but it will remain elevated at levels not seen in years.
Expected Demand – Expect demand to continue to drop til New Year's.
Demand, the number of new pending sales over the prior month, has been dropping since August, the end of the Summer Market. In two weeks leading up to December, it accelerated and dropped the most this year, 122 homes, or 7%, and now is at 1,654 pending sales. It’s the lowest level for a start to December since 2007. Last year, demand was 26% higher with an additional 428 pending sales.
Expected Market Time – Expect a Slight Buyer's Market (over 120 days).
The Expected Market Time, the amount of time it would take to place a home listed today into escrow down the road, had been climbing at a very rapid rate since August. The quick pace was due to the active listing inventory peaking late and remaining elevated while demand dropped. At the start of December, with both supply and demand dropping, the Expected Market Time only increased slightly from 122 to 124 days, a Slight Buyer’s Market (over 120 days). It was at 62 days same time last year.
Seller Expectations – Expect Fair Market Value for your home.
The market is lining up in favor of buyers for the first time since the start to 2011 and it is taking a lot longer to sell - price is king. Upgraded homes in great condition without deferred maintenance and priced accurately will sell quicker than everybody else. Pricing based upon location, condition, and upgrades is absolutely fundamental. Homes that need a bit of work or have an inferior location need to adjust their price. After arriving at a realistic Fair Market Value, sellers are required to pack their patience. This market is far from instant.
Buyer Expectations – Expect a Slight not Deep Buyer's Market.
Buyers may be in the driver’s seat, but a “slight Buyer’s Market” does not mean that prices are dropping right now. Buyers cannot get ahead of themselves. They have the upper hand and can call more of the shots, but this is not a market for writing unrealistic offers in hopes that some desperate seller is going to bite. This is NOT a deep buyer’s market. That occurs when the Expected Market Time surpasses the 150-day mark.
Unlike the last few years, the Orange County housing is quite a bit cooler this December. Notoriously, December is the slowest month of the year in terms of new pending sales. Yet, for years, there simply have not been enough homes on the market.
Since 2012, it was still a slight seller’s market in December despite holiday distractions. Demand drops to its lowest point of the year by the end of the month, but so does the active inventory. The muted demand is offset by a drop in supply.
Last year at this time, the Expected Market Time for all of Orange County was at 65 days, a slight seller’s market. Today, it is at 127 days, nearly double, and a slight buyer’s market.
It is important to note that both a “slight” seller’s market and “slight” buyer’s market means that homes are not appreciating or depreciating much at all; instead, it just indicates who has the opportunity to call more of the shots. Sellers have been calling the shots for years, it is now the buyer’s turn.
It is also extremely crucial to note that housing is local. It varies from city to city and can even vary from neighborhood to neighborhood.
Yet, the market has slowed considerably in Orange County compared to last year. There are still nine cities, 20%, that are considered slight seller’s markets, an Expected Market Time of less than 90 days. Westminster is the only city that is considered hot, less than 60 days, with an Expected Market Time of 57; last year there were 29 hot markets.
Bottom Line: Although housing is local and varies from city to city, a housing cold front has arrived and Orange County has cooled this month to levels not seen since 2010.
Best Advice: You should rely on the professional analysis and advice of a seasoned REALTOR®. That's where we at The Swan Team come in!
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