Orange County Real Estate Report - Values Going Up
With strong demand and an incredibly low inventory, the market will continue to greatly favor sellers, resulting in home values rising.
There is a scarcity of homes for sale. Multiple offers are the norm. It is not uncommon to hear that 15 offers are generated on a home that just hit the market. When this occurs, a bidding war ensues. It is as if a mini auction occurs. The highest and best offer wins and 14 buyers must go back to the drawing board and continue their search for a home. More buyers are desirous of homes than the number of homes available. As a result, home values have been on the rise since June. That is when the Expected Market Time (the time between pounding in the FOR-SALE sign to opening escrow) first dropped below 60-day threshold, a Hot Seller’s Market.
The Expected Market Time is the speed of the market. The lower the Expected Market Time, the faster the market. The current average days on market in Orange County is just 40 days. This time last year the average days on market for a property was 85 days. Yes, your eyes are not deceiving you: the time it takes to sell a property in today's market as compared to last year is slashed in half!
In order for the market to remain hot for the remainder of the year, the supply must continue to be limited and demand must remain elevated. The active inventory will not change much from now through Thanksgiving. Typically, it is dropping at this time of the year, but there are currently more homes coming on the market than what is normal, resulting in a steady number of homes available. In September, there were 24% additional homes placed on the market compared to last year. It appears as if that trend will continue until the week prior to Thanksgiving. Thanksgiving marks the beginning of the Holiday Market. That is when fewer homeowners enter the fray and many unsuccessful, often overpriced, sellers pull their homes off of the market for the holidays and winter season, cyclically the slowest time of the year for real estate.
By the end of 2020, there will be around 3,000 homes on the market, very similar to the end to 2012. That will result in a very low level to start 2021 and may break the 2013 record low of 3,161 homes.
Current demand will remain elevated and strong from now through Thanksgiving. That is typical for this time of the year, but is quite remarkable given that its current level far surpasses recent years. Similar to the active listing inventory, demand will begin its annual drop the week prior to Thanksgiving, the start to the Holiday Market. That is when many buyers will place home shopping on hold in order to enjoy the holiday season. Buyer activity will continue to slow and reach its lowest level of the year upon ushering in 2021. By the end of 2020, demand will drop to around 2,250 pending sales, its strongest reading since 2012.
Intuitively, many might think that this decline in demand will slow the market down. Keep in mind, inventory will decline as well so it is anticipated that our current 40-day expected market time will last through the end of the year. So even at the end of December, buyers can anticipate multiple offers and bidding wars.
Here is the current expected market time for properties by price as compared to last year.
What can you take away from this?
The BOTTOM LINE remains the same as last month and will continue through the end of 2020:
High demand + low inventory + low interest rates = HOT Seller's Market
If you are even just thinking about selling your property, now is a great time to do so. Working with the right real estate team is paramount to selling it quickly and for top dollar. That is where The Swan Team comes in! Contact us now at 949-444-1601 and get the best team in the business working for you!