Housing Insanity Returns
With the number of available homes to purchase at extremely low levels, there simply are too many buyers competing against each other despite high mortgage rates.
A Seller’s Market
When the Expected Market Time drops below 40 days, the housing market leans heavily in favor of sellers.
A three-bedroom, two-and-a-half bathroom, 2,100 square foot home on a 3,700 square foot lot, built in 2003, was placed on the market on the second Tuesday of March at $1,099,000. There was a steady stream of buyers during a three-hour window on Saturday and a two-hour window on Sunday. By Monday evening, more than 20 offers were submitted to the listing agent. The seller countered all offers and asked them to return with their highest and best price. The home closed during the second week of April at $1,145,000, an astonishing 4% above its list price.
Not every home sells above the asking price, especially in today’s high mortgage rate environment. The sales-to-list price ratio for detached homes priced below $2 million so far in April is 99.9%. For luxury homes, anything priced above $2 million (the top 10% of closings), it drops to 94%. The median time on the market is nine days, a little over a week. It would probably be even faster, but there are too many offers for many sellers to sift through.
Active Listings
The active listing inventory in the past couple of weeks decreased by 89 homes, down 4%, and now sits at 2,053, the second-lowest mid-March level since tracking began in 2004 behind last year. In March, 39% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,346 less. Last year, there were 1,732 homes on the market, 321 fewer homes, or 16% less. The 3-year average before COVID (2017 to 2019) was 5,780, or 182% more.
Demand
Demand, the number of pending sales over the prior month, increased by 103 pending sales in the past two weeks, up 7%, and now totals 1,663. Last year, there were 2,241 pending sales, 35% more than today. The 3-year average before COVID (2017 to 2019) was 2,777, or 67% more.
Orange County Housing Summary
- With the inventory falling and demand rising, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, decreased from 41 to 37 days in the past couple of weeks, its lowest level since May of last year. It was 23 days last year, much stronger than today.
- For homes priced below $750,000, the Expected Market Time decreased from 32 to 27 days. This range represents 21% of the active inventory and 29% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time decreased from 26 to 22 days. This range represents 16% of the active inventory and 26% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time decreased from 31 to 27 days. This range represents 10% of the active inventory and 13% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time decreased from 33 to 30 days. This range represents 9% of the active inventory and 11% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time decreased from 56 to 52 days. This range represents 13% of the active inventory and 9% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks dropped from 76 to 72 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 210 to 212 days. For homes priced above $6 million, the Expected Market Time increased from 308 to 341 days.
- The luxury end, all homes above $2 million, account for 31% of the inventory and 11% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.5% of all listings and 0.5% of demand. Only five foreclosures and five short sales are available today in Orange County, with ten total distressed homes on the active market, unchanged from two weeks ago. Last year there was one distressed home on the market, similar to today.
- There were 1,789 closed residential resales in March, 32% less than March 2022’s 2,645 closed sales. March marked a 41% increase compared to February 2023. The sales-to-list price ratio was 99.6% for all of Orange County. Foreclosures accounted for 0.1% of all closed sales, and there were no closed short sales. That means that 99.9% of all sales were good ol’ fashioned sellers with equity.
