Orange County – The housing market varies from one city to the next and also by price range.
Category : Laguna Beach Real Estate
Different Markets: Even though Orange County as a whole is HOT, there are plenty of cities and price ranges that are not.
It is not uncommon to hear a REALTOR® from one area express how the market is “dead,” while a REALTOR® from another area exclaims how they had tons of showings and homes are flying off the market. Yet, they are both right. The problem is that we all tend to focus on Orange County as a whole. There are 34 cities and 14 unincorporated areas. Orange County is HUGE. As a result, some cities come with a higher price tag, and others are much more affordable.
It is price that determines whether a market is hot or cold. Detached homes priced below $750,000 are hot. Condominiums priced below $500,000 are hot too. A detached home priced at $680,000 is going to attract a lot more attention than a home priced at $1.5 million. As prices rise, the pool of buyers able to purchase a home shrinks. So, it takes a lot longer to sell homes in the upper ranges compared to the lower ranges.
The hottest markets can be found in cities and areas where the vast majority of their homes are priced within the hottest price ranges. For example, Fountain Valley has an expected market time of only 26 days. There are 46 homes on the market today and only 6 are priced above $1 million, 13%. On the other hand, Ladera Ranch has an expected market time of 117 days. There are 171 homes on the market today and 69 homes priced above $1 million, 40%. And, at the far extreme, Laguna Beach has an expected market time of 337 days. There are 281 homes on the market and 265 are priced above $1 million, 94%.
The cities and areas with an expected market time of less than 60 days, the hottest markets, have an average list price of $669,000. About a third of Orange County is considered HOT. Conversely, the cities and areas with an expected market time of over 90 days, or three months, cumulatively have an average list price of $2.3 million. Nearly a third of Orange County is considered slow, or “dead” as some REALTORS® have described it.
For buyers looking to purchase in the lower price ranges, the market is hot. Lower priced homes attract a lot more attention and are more inclined to generate multiple offers and plenty of activity. Buyers need to be on their toes in order to be successful; “you snooze, you lose.” Yet, in the higher ranges, the market is a lot slower. Buyers can afford to be a bit more patient.
Sellers can price a bit more aggressively in the lower ranges. But, stretching the price too far, which many sellers initially do, results in less activity and no offers. In the upper ranges, sellers have their work cut out for them. Carefully pricing based upon recent comparable pending and closed sales is absolutely fundamental in order to achieve success. Sellers are not getting away with stretching the price in the upper ranges right now. There is just too much competition.
Luxury End: Luxury demand increased by 8% within the past couple of weeks.
Demand is calculated by the number of new pending sales over the prior month. Demand for homes above $1 million reached a height at the start of May of 542 pending sales. It dropped by 19% by mid-July and totaled 436. Within the past couple of weeks, it bounced back and added an additional 33 pending sales, an 8% increase.
The inventory of homes above $1 million has been increasing all year long. It has grown from 1,523 homes at the start of the year to 2,756 homes just two weeks ago, an increase of 81%. It finally dropped for the first time this year, shedding 34 homes, or 1%, in the past couple of weeks. It will be interesting to see where it goes from here. At the very least, the upward trend has taken a break.
For homes priced between $1 million to $1.5 million, the expected market time dropped from 141 days to 120 in the past two weeks. For homes priced between $1.5 million to $2 million, the expected market time increased slightly from 158 days to 162 days. For homes priced above $2 million, the expected market time dropped from 345 days to 334 days.
Active Inventory: The inventory dropped for the first time this year.
The active inventory shed 12 homes in the past two weeks and now sits at 7,317 homes. That’s the first time the active inventory dropped this year. The inventory typically peaks in mid to late August, so it will be interesting to see if Orange County just experienced an early peak, or if there’s a little more room for growth in the coming weeks. It will most likely grow a bit from here. The inventory is having a hard time continuing its trend in growth because demand is a lot stronger right now than it has been in years. More homes placed in escrow means fewer homes that remain within the active inventory.
Last year there were 201 fewer homes on the market, 3% less.
Demand: In the past two-weeks demand increased by 3%.
Demand, the number of new pending sales over the prior month, increased by 3%, or 83 homes, and now totals 2,866 pending sales, its highest level for this time of year since 2012. The low interest rate environment has helped fuel the surge in demand. For perspective, demand is 10% off of its start of May peak of 3,196 pending sales. The expected market time dropped from 79 days two weeks ago to 77 days today.
Orange County Housing Market Summary:
- The active inventory dropped for the first time this year, shedding 12 homes in the past two weeks and now totals 7,317 homes. There are 201 more homes compared to last year at this time.
- There are 18% fewer homes on the market below $500,000 compared to last year at this time and demand is down by 13% as well. As home values continue to rise, this range is slowly disappearing.
- Demand, the number of pending sales over the prior month, increasedby 3% from 2,783 to 2,866 in the past two weeks. Demand was at 2,698 last year, 6% less than today. The average pending price is $798,617.
- The average list price for all of Orange County is $1.5 million.
- For homes priced below $750,000, the market is HOT with an expected market time of just 51 days. This range represents 44% of the active inventory and 66% of demand.
- For homes priced between $750,000 and $1 million, the expected market time is 82 days, a slight seller’s market (between 60 and 90 days). A slight seller’s market is one with very little appreciation, but sellers still get to call more of the shots during negotiation. This range represents 19% of the active inventory and 18% of demand.
- For luxury homes priced between $1 million to $2 million, the expected market time is at 131 days, decreasing by 15 days in the past couple of weeks. For luxury homes priced above $2 million, the expected market time dropped from 345 days to 334 days. The luxury end, all homes above $1 million, accounts for 37% of the inventory and only 16% of demand.
- The expected market time for all homes in Orange Countydecreased from 79 to 77 days in the past couple of weeks, a slight seller’s market.
- Distressed homes, both short sales and foreclosures combined, make up only 1.9% of all listings and 3.4% of demand. There are 48 foreclosures and 88 short sales available to purchase today, that’s 136 total distressed homes on the active market, an increase of 8 in the past two weeks.
- There were 3,116 closed sales in June, a 3% increase over May and 1% fewer than last year’s 3,141 closings. The sales to list price ratio was 97.7%. Foreclosures accounted for 1.4% of all closed sales and short sales accounted for 1.2%. That means that 97.4% of all sales were good ol’ fashioned equity sellers.