Jeff Maass
Your Orange County Real Estate Resource | Phone: (949)228-2131

August Market Update

August Housing Market Update

The Sky is NOT Falling...


Orange County Housing Report:
The Sky is NOT Falling...





Buyer demand may not be as hot as prior years, but the housing market is not collapsing either.

No Housing Collapse: The underlying housing fundamentals have stabilized significantly compared to last year’s slide.


Little kids often have a tough time climbing under the covers and swiftly dozing off to sleep. Instead, they look under their bed to make sure there is nothing there. They look in their closet and then close the door tight. They make certain that the nightlight is brightly shining. There are even times when they will ask dad or mom to be absolutely certain that there are no monsters in their room. Finally, they anxiously fall asleep.

For buyers or sellers wondering if there are any monsters lurking around the corner, they can be rest assured that the sky is not falling, there are no surprises on the housing front anytime soon. Reports from the housing trenches are that many buyers expect the market to drop like a rock and that is when they will finally be able to purchase. That simply is not on the horizon. Sitting back and waiting on the sidelines will prove to be a waste of time.

Last year, major cracks in the housing market emerged. The HOT market continued from 2012 through the start of 2018, until the underlying fundamentals quickly eroded. From May through August of last year, the active inventory climbed by 17%, demand dropped by 10%, and the Expected Market Time (the amount of time it would take from hammering in the FOR SALE sign to opening escrow) rocketed upward. The Expected Market Time continued to soar by climbing an additional 56% from August through the end of the year, compared to a 7% average from 2012 through 2017.



This year, from May to the start of August, the active inventory has remained unchanged, demand has only dropped by 2%, and the Expected Market Time increased by only 1%. Housing is not grinding to a halt. The sky is not falling. Typically for this time of the year, the Summer Market, the active inventory rises, demand drops slightly, and the Expected Market time slowly increases. This year, there has not been much change at all.

Orange County housing has improved dramatically since all the cracks of last year. But that does NOT mean that the market is back on track and will rapidly appreciate like it did before. Take a closer look at demand. It is up 9% compared
to last year. But, do NOT get too excited in comparing the market this year to last year. The numbers are going to look great for the rest of the year compared to 2018. However, housing ground to a halt from July to the end of 2018. A better comparison is to look at the market when it was hot, improving, and appreciating.

Contrasting this year to 2017 paints a much better picture as to where local real estate is heading. Demand in Orange County is off by 10% compared to 2017. It is still muted, just not sliding off a cliff like it was last year. The inventory is up by 27% compared to two years ago. The Expected Market Time is at 86 days compared to 61 days in 2017.

It is time for everybody’s expectations to be adjusted. The market is not as hot as before. Housing is not sliding into the abyss. Property values are not skyrocketing right now, but they are not falling either. Local real estate is not changing that much; what you see is what you get. Low mortgage rates have saved the day and they are not going anywhere. Instead, they are on the decline, reaching three-year lows. These low rates will cushion the market from stalling.

The Expected Market Time today is 86 days, identical to last year. Unlike last year, when it climbed to 134 days by year’s end, it will only rise slightly from here. At 86 days it is a slight Seller’s Market. That is a market that is characterized by not a lot of appreciation, but sellers get to call more of the shots during negotiations. It will most likely move to a Balanced Market from here, one that does not favor sellers or buyers. The market is hottest in the lower ranges where there are more multiple offers and sales prices are closer to their list prices. As the price climbs above $1 million, the market slows considerably, Expected Market Times climb, multiple offers are NOT the norm, sales prices are not as close to their asking prices, and there are a lot fewer success stories.

The bottom line: while housing is not as robust today as prior years, it is not spiraling out of control and will not result in a housing downturn anytime soon. The sky is not falling.

Active Inventory: The current active inventory shed 113 homes in the past two-weeks.
In the past two-weeks, the active listing inventory dropped by only 113 homes, down 1%, and now totals 7,488. It looks as if the housing peak occurred two weeks ago and will drop from here. In comparing this year to last year, the difference at the beginning of the year was staggering. There were 2,204 more homes than 2018 at the start of January, 59% more. Today, there are 595 more homes compared to last year in August, 9% more. The difference is dissipating and within the next month, there will be fewer homes compared to the prior year.




From now through the end of the year, the active listing inventory will slowly drop, and will pick up speed during the holidays when fewer homes come on the market and many unsuccessful sellers pull their homes off the market.

Demand: In the past two-weeks, demand increased by 4%.
Demand, the number of new pending sales over the prior month, increased by 101 pending sales in the past two-weeks, up 4%, and now totals 2,606. It is the largest gain for the beginning of August since 2013. In the coming weeks ahead, the market will be transitioning to the Autumn Market when fewer homes come on the market and demand begins to dip slowly, leaving behind the two best times of the year in terms of activity, the Spring and Summer Markets. It will slowly decline for the remainder of the year, picking up steam during the holidays.

Last year at this time, there were 212 fewer pending sales than today. Current demand is still muted, just not as severe as this time last year when interest rates were climbing. Two years ago, it was 11% stronger than today.

The current Expected Market Time decreased from 91 days to 86 days in the past two weeks, a slight Seller’s Market (60 to 90 days), where sellers get to call more of the shots during a negotiation and property values are not increasing by much. Last year, the Expected Market Time was at 86 days, identical to today.

Luxury End: The luxury market improved in the past couple of weeks.
In the past two-weeks, demand for homes above $1.25 million increased by 15 pending sales, a 5% increase, and now totals 331. The luxury home inventory decreased by 44 homes and now totals 2,507, a 2% drop after reaching a height for the year two-weeks ago. The overall Expected Market Time for homes priced above $1.25 million decreased from 242 days to 227 over the past two-weeks, still sluggish.

Year over year, luxury demand is the same and the active luxury listing inventory is up by an additional 355 homes, or 16%. Extra seller competition and continued muted demand is a trend that will persist for the remainder of the year. The expected market time last year was at 195 days, better than today.

For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the Expected Market Time decreased from 147 to 130 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 240 to 244 days. For homes priced between $2 million and $4 million, the Expected Market Time decreased from 288 to 280 days. For homes priced above $4 million, the Expected Market Time decreased from 500 to 404 days. At 404 days, a seller would be looking at placing their home into escrow around September 2020.




Orange County Housing Market Summary:

  • The active listing inventory decreased by 113 homes in the past two-weeks, down 1%, and now totals 7,488. The inventory most likely reached a peak for the year of 7,601 two weeks ago. Last year, there were 6,893 homes on the market, 595 fewer than today. There are 9% more homes than last year.
  • Demand, the number of pending sales over the prior month, increased by 101 pending sales in the past two-weeks, up 4%, and now totals 2,606. Last year, there were 2,394 pending sales, 9% fewer than today.
  • The Expected Market Time for all of Orange County decreased from 91 days two weeks ago to 86 days today, a slight Seller’s Market (between 60 to 90 days). It was at 86 days last year.
  • For homes priced below $750,000, the market is a hot Seller’s Market (less than 60 days) with an expected market time of 58 days. This range represents 38% of the active inventory and 56% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 70 days, a slight Seller’s Market. This range represents 19% of the active inventory and 24% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 109 days, a Balanced Market.
  • For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 147 to 130 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 240 to 244 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 288 to 280 days. For luxury homes priced above $4 million, the Expected Market Time decreased from 500 to 404 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 13% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.8% of all listings and 1.4% of demand. There are only 20 foreclosures and 37 short sales available to purchase today in all of Orange County, 57 total distressed homes on the active market, up one in the past two-weeks. Last year there were 88 total distressed homes on the market, slightly more than today.
  • There were 2,871 closed residential resales in July, 5% more than July 2018’s 2,734 closed sales. July marked a 6% increase compared to June 2019. The sales to list price ratio was 98.3% for all of Orange County. Foreclosures accounted for just 0.5% of all closed sales, and short sales accounted for 0.24%. That means that 99.3% of all sales were good ol’ fashioned sellers with equity.

Have a great week.

Sincerely,

Jeff Maass
Broker/Owner
Regency Real Estate Brokers
Cell 949.228.2131
jeff@jeffmaass.com
www.jeffmaass.com
Cal DRE#00851029


May's Housing Market Update




Orange County Housing Report: The Price is Right

Sellers have until the end of July to get their homes into escrow, indicating that the price better be right.


Pricing: Expired listings are up 64% so far in 2019, illustrating how crucial pricing is this year to avoid becoming another statistic.
Spring is in the air and so are the community garage sales. There is a real strategy behind a successful garage sale. For the amateur trying to overcapitalize on their used possessions, they often overprice and miss the opportunity to cash in on the most optimal time of the sale, the first two hours. Everybody seemingly gets sucked into the emotions behind their personal belongings. This emotional attachment leads to asking way too much. After a steady stream of uninterested buyers because of the quoted price, the amateur salesperson lowers it. Yet, the wave of initial buyers has already passed, and the steady stream diminishes to a trickle. Desperate to sale, the price is lowered yet again, attempting to avoid carting everything back to the garage and attic.

This scenario plays out over and over again on the housing front as well. Sellers frequently ignore their professional REALTOR® and price a home arbitrarily based upon emotion, or what they need out of a home in order to move on. It is challenging to see all of the deferred maintenance, lack of upgrades, an inferior location, or a small lot size, when a seller is living LIFE in it. Home is where the children are raised. First steps, first time riding a bike, first tooth for the Tooth Fairy, first day of school, first dance, there are a lot of “firsts” in a home, a collection of memories that tug at our heartstrings.

Ignoring the expert on pricing advice is understandable, but unfortunate. The best advice is to lean into their years of experience and understanding of current market conditions, trends, and pricing strategies. The emotions behind pricing must be removed to find success. A buyer’s lens is much different. They do not want to inherit deferred maintenance. They want to see upgrades. The location and lot size are important considerations. Most importantly, buyers are not willing to overpay for a home, especially in 2019.

The active listing inventory is at its highest level since 2011. There are 29% more homes on the market compared to last year. With more inventory, the number of unsuccessful sellers is escalating. So far this year, there have been 3,455 expired listings, up 64% compared to last year. Based upon the number of closed sales through April, 30% of homes that were marketed did not find success. At this time last year, it was only 17%.




The chances of finding success has dropped substantially. Pricing a home accurately is more important today than in years. This is not the Spring Markets of 2012 through 2018. The average Expected Market Time (the time from the initial FOR SALE sign to opening escrow) during those years was 56 days. It is at 84 days today, nearly a month longer. The Expected Market Time is a factor of both supply and demand. There is a lot more seller competition with the extra supply; and, demand is muted as well. Demand (number of pending sales in the prior 30-days) is down 14% compared to the last seven years.

How should sellers approach the housing market? The best approach is to be sure to lean into the expert, the real estate professional, and price a home according to its Fair Market Value. This is determined by condition, upgrades, and location. The REALTOR® will be able to pull their emotion out of a home and objectively arrive at the price that will result in a sale. The second step is to be patient. This housing market is no longer instantaneous. Finally, after being exposed to the market for a while and receiving objective feedback directly from buyers, do not be afraid to make some adjustments in condition and price.

How should buyers approach the housing market? Remember, it is NOT a Buyer’s Market. It is not even a Balanced Market. Currently, it is a slight Seller’s Market. That means that when a home is accurately priced, it will generate buyers’ interest. On average, homes are selling within 2% of their asking price. Lowball offers will only result in wasting everyone’s time. Jump on homes that match your specified criteria and are priced according to their Fair Market Value.

Active Inventory: In the past couple of weeks, the active inventory surpassed last year’s peak and will continue to climb.
In the past two weeks, the active listing inventory increased by 228 homes, up 3%, and now totals 7,413, surpassing last year’s peak of 7,292. That’s the highest level since September 2014. It will continue to climb until peaking sometime this summer, most likely mid-August. By then the inventory will reach its highest level since 2011. That would be a lot more seller competition and a much slower market than today.

Last year at this time there were 5,730 homes on the market. That means that there are 29% more homes available today. This is the highest level of homes on the market for this time of the year since 2011.


Demand: In the past couple of weeks, demand was nearly unchanged.
Demand, the number of new pending sales over the prior month, increased by 2 pending sales in the past two weeks, nearly unchanged, and now totals 2,655. After an initial slow start to the year, demand surged from February through April. In May, it slightly came off of those highs and most likely peaked early for 2019. Even with interest rates dropping to 4%, there are external economic headwinds with are continuing to mute demand. Demand will not change much from here. It will remain relatively the same through mid-June. From there, expect demand to slowly and systematically fall for the remainder of the year, starting with numerous summer distractions. Current demand is as strong as it is going to get.

Last year at this time, there were 71 more pending sales, 3% more than today.

The current Expected Market Time increased from 81 days to 84 days in the past two weeks, a slight Seller’s Market. It is still the highest reading for this time of the year since 2011. Last year, the Expected Market Time was at 63 days, better than today.

Luxury End: The luxury market continued to slow.
In the past two-weeks, demand for homes above $1.25 million decreased by 31 pending sales, an 8% drop, and now totals 361. That is back to back 8% drops over the past month. The luxury home inventory grew by 114 homes and now totals 2,483, a 5% increase and its highest level in years. The overall expected market time for homes priced above $1.25 million increased from 181 days to 206 over the past two-weeks, a significant increase. Four weeks ago it was at 161 days.

Year over year, luxury demand is down by 76 pending sales, or 17%, and the active luxury listing inventory is up by an additional 384 homes, or 18%. Extra seller competition and muted demand in the luxury ranges in 2019 is a theme that is getting louder. The expected market time last year was at 144 days, noticeably less compared to today.

For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the expected market time decreased from 128 to 125 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 134 to 174 days. For homes priced between $2 million and $4 million, the expected market time increased from 228 to 262 days. For homes priced above $4 million, the expected market time increased from 463 to 568 days. At 568 days, a seller would be looking at placing their home into escrow around December of 2020.




Orange County Housing Market Summary:

  • The active listing inventory increased by 228 homes in the past two weeks, up 3%, and now totals 7,413, the highest level since September 2014. Last year, there were 5,730 homes on the market, 1,683 fewer than today. There are 29% more homes than last year.
  • Demand, the number of pending sales over the prior month, increased by 2 pending sales in the past two-weeks, nearly unchanged, and now totals 2,655. Last year, there were 2,726 pending sales, 3% more than today.
  • The Expected Market Time for all of Orange County increased from 81 days two weeks ago to 84 days today, a slight Seller’s Market (between 60 to 90 days) and the highest level for this time of the year since 2011. It was at 63 days last year.
  • For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 61 days. This range represents 39% of the active inventory and 54% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 63 days, a slight Seller’s Market. This range represents 18% of the active inventory and 24% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 93 days, a Balanced Market.
  • For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time decreased from 128 to 125 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 134 to 174 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 228 to 262 days. For luxury homes priced above $4 million, the expected market time increased from 463 to 568 days.
  • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.8% of all listings and 1.4% of demand. There are only 22 foreclosures and 41 short sales available to purchase today in all of Orange County, 63 total distressed homes on the active market, down 5 in the last two-weeks. Last year there were 42 total distressed homes on the market, fewer than today.
  • There were 2,558 closed residential resales in April, 2% fewer than April 2018’s 2,614 closed sales. April marked a 13% increase from March 2019. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures accounted for just 0.3% of all closed sales, and short sales accounted for 0.4%. That means that 99.3% of all sales were good ol’ fashioned sellers with equity.


Have a great week.

Sincerely,
Jeff


Jeff Maass
Broker/ Owner
Regency Real Estate Brokers
(949) 228-2131
jeff@jeffmaass.com
www.jeffmaass.com
Cal BRE#00851029




May's Housing Update

April Housing Update

Jeff's Orange County Housing Report: 


     
                             April Housing Update


Jeff's Orange County Housing Report: 

Prospective buyers and sellers constantly ask when is it the right time to buy or sell. It is now.

The right time: With low interest rates and a surge in demand, it is a good time for both buyers and sellers to make a move.

Everybody is always trying to time life perfectly. When we go to the movies, which of the three lines is going to get us to the box office window the fastest? Is it better to wait to buy that first car as a teenager or wait until after college? Will it be too crowded to visit Disneyland now or is it better to wait until the fall? When is it the right time for a guy to pop the question and ask his girlfriend for her hand in marriage? When should a couple have a baby, right now or is it better to travel first? Life is all about “perfect timing,” and deciding to buy or sell is yet another instance where everybody wants to wait for the very best time to make that move.

When is “the” best time to make a move? For prospective buyers and sellers, the current housing conditions and trends point to NOW. How can it be both an excellent time to buy and sell at the very same time? For buyers, it is all about interest rates. For sellers, it is all about top dollar and cashing in on this year’s consistent, growing demand.

At the end of 2018, prognosticators, economic experts, and major financial institutions were all forecasting interest rates anywhere from 5.25% to 6% in 2019. That seemed more than reasonable given the fact that rates had climbed from 3.95% at the beginning of 2018 to nearly 5% by November. Yet, after an exceptionally rocky December for Wall Street and news of an economic slowdown in both China and Europe, interest rates retreated and dropped to 4%. Since then, they have risen slightly to about 4.2%, where they stand today. The bottom line, mortgage rates are back down to historical lows. It is a great time to be a buyer.                                                           

These rates could be gone tomorrow if more and more positive economic news hits the presses. The tremendous twist of fate has allowed buyers to afford a lot more home. Affordability improved radically. For a buyer looking for a payment of about $3,000 per month with 20% down, they are now looking at purchasing a home priced at $762,500 with a 4.25% mortgage rate. Compare that to last November when rates were just about 5%; that $3,000 per month payment allowed abuyer to purchase a home at $698,750. The drop in rates has allowed a buyer to purchase $63,750 more home, yet the mortgage payment did not change.

For sellers, lower rates have pushed the market from a slight Buyer’s Market at the end of 2018 and start to January of this year, to a Balanced Market in February, to a slight Seller’s Market today. Last month, rates dropped nearly a half of a percentage point, dropping from 4.5% to nearly 4%. That plunge resulted in a considerable uptick in demand (prior 30-days of pending sales). In the past two weeks alone, demand increased by 11%, while the active inventory only increased by 1%. As a result, the Expected Market Time (the number of days it would take for a home placed on the market today to open escrow down the road) dropped from 84 to 76 days, the largest drop at this time of year since 2009. This dip is not typical for mid-April.

 

Why is it such a great time to sell right now? From here, demand typically rises slowly until peaking by the end of May. With the distractions of graduation and the kids off for summer break, demand starts to slow in June. In the past seven years, from May to August, demand drops, on average, by 10%. At the same time, the inventory increased, on average, by 18%. With falling demand and an increasing supply of homes that sellers are competing against, the Expected Market Time rises. The best time of the year for sellers, with the lowest Expected Market Time, is from February until mid-May.

For sellers to properly take advantage of the most optimal time to sell, they need to be on the market now and priced right. Currently, there are plenty of homes that are flying off the market with multiple offers, often selling for more than their asking prices. BUT, there are also plenty of homes that are sitting on the market with no interest, or offers to purchase that come in well below the asking price. Accurately pricing a home based upon the condition, location, upgrades, and overall appeal is fundamental in order to find success. Any home that look like the final reveal on one of the many HGTV programs where a fixer-upper is transformed into a dream home, will procure an avalanche of offers in today’s market IF it is priced well. Pricing a home too aggressively will result in very little activity and ultimately will just sit, missing the opportunity to cash in on the best time of the year to sell.

The bottom line: the best time of the year for buyers and sellers to make a move is right now.

Active Inventory: In the past couple of weeks, the active inventory increased by 1%.

In the past two weeks, the active listing inventory increased by 57 homes, up 1%, and now totals 6,933, knocking on the door of 7,000 for the first time since November. Expect the inventory to continue to climb from now until it peaks sometime between July and August. The inventory will most likely eclipse the 8,000 home level and reach its highest summer peak since 2011.

Last year at this time there were 5,144 homes on the market. That means that there are 35% more homes available today. This is the highest level of homes on the market for this time of the year since 2011.

Demand: In the past couple of weeks, demand increased by an astonishing 11%.

Demand, the number of new pending sales over the prior month, jumped by 279 pending sales in the past two weeks, up 11%, and now totals 2,272, surpassing last year’s level for the first time since July 2017. This spike is unusual for this time of the year, most likely prompted by the massive drop in rates last month. From here, expect demand to slowly rise as it draws closer to its peak, sometime in May. After that, it will drop for the remainder of the year.

Last year at this time, there were 84 fewer pending sales, 3% fewer than today.

Luxury End: The luxury market improved dramatically in the past two weeks.

In the past two-weeks, demand for homes above $1.25 million increased by 54 pending sales, a 15% increase, and now totals 424, its highest level since mid-May 2018. The luxury home inventory grew by 69 homes and now totals 2,279, a 3% increase. The overall expected market time for homes priced above $1.25 million decreased from 179 days to 161 over the past two-weeks, a significant drop.

Year over year, luxury demand is up by 53 pending sales, or 14%, and the active luxury listing inventory is up by an additional 305 homes, or 15%. There is a lot more seller competition so far this year compared to 2018. The expected market time last year was at 160 days, nearly identical to today.

For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the expected market time decreased from 109 to 108 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 154 to 133 days. For homes priced between $2 million and $4 million, the expected market time decreased from 222 to 186 days. For homes priced above $4 million, the expected market time decreased from 466 to 425 days. At 466 days, a seller would be looking at placing their home into escrow around June of 2020.

Orange County Housing Market Summary:

• The active listing inventory increased by 57 homes in the past two weeks, up 1%, and now totals 6,933. Last year, there were 5,144 homes on the market, 1,789 fewer than today. There are 35% more homes than last year.

• So far this year, 3% fewer homes came on the market below $500,000 compared to 2018, and there were 15% fewer closed sales. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is continuing to vanish.

• Demand, the number of pending sales over the prior month, increased by 279 pending sales in the past two-weeks, up 11%, and now totals 2,724, surpassing the prior year for the first time since July 2017. Last year, there were 2,340 pending sales, 3% fewer than today.

• The Expected Market Time for all of Orange County decreased from 84 days two weeks ago to 76 days today, a slight Seller’s Market (between 60 to 90 days) and the highest level for this time of the year since 2011. It was at 58 days last year.

• For homes priced below $750,000, the market is a Seller’s Market (less than 60 days) with an expected market time of 55 days. This range represents 40% of the active inventory and 55% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 66 days, a slight Seller’s Market. This range represents 18% of the active inventory and 21% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 83 days, a slight Seller’s Market.

• For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time decreased from 109 to 108 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 154 to 133 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 222 to 186 days. For luxury homes priced above $4 million, the expected market time decreased from 466 to 425 days.

• The luxury end, all homes above $1.25 million, accounts for 33% of the inventory and only 16% of demand.

• Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 1% of demand. There are only 23 foreclosures and 36 short sales available to purchase today in all of Orange County, 59 total distressed homes on the active market, down 2 in the last two-weeks. Last year there were 43 total distressed homes on the market, slightly fewer than today.

• There were 2,265 closed residential resales in March, 13% fewer than March 2018’s 2,613 closed sales. March marked a 47% increase from February 2019. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.5%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.


Have a great week!
Jeff

Jeff Maass
Broker/Owner
Regency Real Estate Brokers
949.228.2131
www.jeffmaass.com
jeff@jeffmaass.com


April's Housing Update

                            
This is the time of the year when more sellers come on the market than any other time of the year.

More Seller Competition: The active listing inventory is rising.
Isn’t it beautiful? Southern California hills are spectacularly adorned in a blanket of bright orange California Poppies. The record rainfall resulted in a “super bloom” like nobody can remember. People are venturing outside to capture the incredible site, hiking and taking selfies along the way. Spring is definitely here!

The record rainfall kept many homeowners from entering the fray and placing their homes on the market. Yet, the deluge of rain is now in the past. That was during the winter, but spring has arrived in housing as well and there is nothing keeping owners from pounding FOR SALE signs in their front yards. Like the blanket of California poppies, this is the time of the year when more FOR SALE signs blanket neighborhoods in Southern California and across the U.S. than any other time of the year.

Nearly a third of all homes that are placed on the market during the year occur from April through June. There has already been an uptick in the number of homes coming on the market within the last couple of weeks. As a result, the active listing inventory in Orange County grew by 5%, adding an additional 344 homes. It now sits at 6,876 homes, its highest level since mid-November of 2018.

Right now, it is the best time of the year to sell a home in terms of buyer demand. Demand is currently increasing as well, growing by 4% in the past two weeks. It will peak by mid-May. Yet, even with increasing demand, it does not mean that the market is getting hotter. In fact, what you see is what you get. The market will probably not improve any more than where it is today. This is due to the fact that while demand is rising, so is the active listing inventory. The inventory is rising slightly faster than demand. The added seller competition is offsetting any improvement in demand.
In looking at the Expected Market Time for Orange County (that is the number of days from coming on the market to opening escrow), it has dropped like a rock from the beginning of the year, transitioning from a slight Buyer’s Market to a Balanced Market to a slight Seller’s Market, where it stands today. It dropped from 152 days on January 10th to 84 days today.



For those sellers holding their collective breath in anticipation of a hot Spring, that is not going to occur. Instead, it will be a lukewarm housing market. The current Expected Market Time of 84 days is the highest level for this time of the year since 2011. Last year at this time it was a HOT Seller’s Market and the Expected Market Time was at 54 days.

The difference between a slight Seller’s Market (between 60 to 90 days) and a hot Seller’s Market (less than 60 days) is that the number of buyer showings has dropped, the number of multiple offer situations has dropped, home appreciation has stalled and is only slight rising, and open house activity has fallen. It is quite simply not as hot as prior years. Sellers still get to call the shots, but when the market does not move as quickly, home prices do not move as quickly as well.

Sellers need to understand that the market is not going to get better. In fact, by mid-May it will start to slow. That is when demand starts to drop with all the distractions of graduation and summertime. The inventory continues to rise until peaking sometime in July to August. With slightly dropping demand and increasing seller competition in the form of a rising active listing inventory, the Expected Market Time will grow and the market will slow.

The key for sellers is to realistically price their homes right now versus waiting down the road to get realistic when the market is slowing.

Active Inventory: In the past couple of weeks, the active inventory increased by 5%.
In the past two weeks, the active listing inventory increased by 344 homes, up 5%, and now totals 6,876, the largest two week increase since April of last year. This spike is not only because it is the Spring Market; it is also due to the torrential downpours now being in the past and warmer dryer weather ahead in the forecast. We can expect the inventory to continue to climb from here until it peaks sometime this summer between July and August. The inventory will most likely eclipse the 8,000 home level for the first time since 2014 and it may reach heights not seen since the start of 2012, surpassing 8,500 homes.

Last year at this time there were 4,708 homes on the market. That means that there are 46% more homes available today. This is the highest level of homes on the market for this time of the year since 2011.

Demand: In the past couple of weeks, demand increased by 4%.
Demand, the number of new pending sales over the prior month, continued to rise, increasing by 95 pending sales in the past two weeks, up 4%, and now totals 2,445. Demand is not growing as rapidly after soaring for the first two-and-a-half months of this year, coming off lows not seen since 2008. Demand also slows as it draws closer to its peak, sometime in May. From there, demand will slowly diminish through the rest of the Spring and Summer Markets.

The retreat in interest rates this year has helped demand considerably. As a result, housing has evolved from a slight Buyer’s Market to a slight Seller’s Market, where it stands today. Part of why the market has not developed further to a hot Seller’s Market is that there still is buyer apprehension in approaching housing. They are careful not to overpay and are looking to offer as close to a home’s Fair Market Value as possible. They are not willing to stretch the asking price, which is why homes are currently not appreciating as fast as they have in prior years.

Last year at this time, there were 157 additional pending sales, 6% more than today.

Luxury End: The luxury inventory is climbing faster than luxury demand.
In the past two-weeks, demand for homes above $1.25 million increased by 18 pending sales, a 5% increase, and now totals 370, its highest level since mid-June 2018. The increase in demand was offset by a spike in the luxury home inventory of 120, and now totals 2,210, a 6% increase. The overall expected market time for homes priced above $1.25 million increased from 178 days to 179 over the past two-weeks, a slight increase.

Year over year, luxury demand is up by 17 pending sales, or 5%, and the active luxury listing inventory is up by an additional 351 homes, or 19%. There is a lot more seller competition so far this year compared to 2018. The expected market time last year was at 158 days, better than today.

For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the expected market time increased from 103 to 109 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 146 to 154 days. For homes priced between $2 million and $4 million, the expected market time decreased from 233 to 222 days. For homes priced above $4 million, the expected market time decreased from 562 to 466 days. At 466 days, a seller would be looking at placing their home into escrow around July of 2020.




Orange County Housing Market Summary:
  • The active listing inventory increased by 344 homes in the past two weeks, up 5%, and now totals 6,876. Last year, there were 4,708 homes on the market, 2,168 fewer than today. There are 46% more homes than last year.
  • So far this year, 3% fewer homes came on the market below $500,000 compared to 2018, and there were 15% fewer closed sales. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is continuing to vanish.
  • Demand, the number of pending sales over the prior month, increased by 95 pending sales in the past two-weeks, up 4%, and now totals 2,445, its lowest level for this time of the year since 2008. Last year, there were 2,602 pending sales, 6% more than today.
  • The Expected Market Time for all of Orange County increased from 83 days two weeks ago to 84 days today, a slight Seller’s Market (between 60 to 90 days) and the highest level for this time of the year since 2011. It was at 54 days last year.
  • For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 62 days. This range represents 41% of the active inventory and 55% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 73 days, a slight Seller’s Market. This range represents 18% of the active inventory and 21% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 90 days, a slight Seller’s Market.
  • For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time increased from 103 to 109 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 146 to 154 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 230 to 222 days. For luxury homes priced above $4 million, the expected market time decreased from 562 to 466 days.
  • The luxury end, all homes above $1.25 million, accounts for 32% of the inventory and only 16% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.8% of all listings and 1.8% of demand. There are only 19 foreclosures and 30 short sales available to purchase today in all of Orange County, 49 total distressed homes on the active market, down two from two-weeks ago. Last year there were 39 total distressed homes on the market, slightly less than today.
  • There were 2,265 closed residential resales in March, 13% fewer than March 2018’s 2,613 closed sales. March marked a 47% increase from February 2019. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.5%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.

Have a great week!
Jeff

Jeff Maass
Broker/ Owner
Regency Real Estate Brokers
(949) 228-2131
jeff@jeffmaass.com
www.jeffmaass.com
Cal BRE#00851029

March Housing Update

 Orange County Housing Report:  Buyers Gamble and What's Happening With Interest Rates?
   

 
Many buyers are sitting on the fence waiting for interest rates to fall, but don’t know when to cash in their chips.

Gambling on Rates: Interest rates have fallen to 4.25%, the lowest level in over a year.
No matter what your age, or what kind of music you like, everybody has listened to and knows the lyrics to Kenny Roger’s “The Gambler.” “You’ve got to know when to hold ‘em. Know when to fold ‘em. Know when to walk away. And know when to run.” It is a song about a young man who stumbles upon gambling advice from a seasoned, old, veteran gambler “on a train bound for nowhere.”
 
So many potential buyers are just like the young gambler, they simply don’t know when they should walk away from the fence they are sitting on and cash in their chips. They are waiting to make the plunge into home ownership but are trying to “time the market.” Unfortunately, so many of these buyers, and homeowners waiting to refinance, have been sitting on the sideline and have already missed prior opportunities to cash in on excellent interest rates. Fortunately, rates are excellent once again.
 
Last week was a huge week for interest rates. The last several months have been huge for interest rates. Since November 2018, interest rates have dropped dramatically from 5% to 4.25%, a substantial difference that helps on the homebuyer affordability front. Today’s rate of 4.25% is the lowest since February 2018.
 
What happened? The United States economy is showing signs of slowing, there has been an international economic slowdown, the price of oil has dropped substantially, the trade war seems as if there is no end in sight, and there has been tremendous stock market volatility. That is enough for investors around the world to park their money in long term U.S. government bonds. When this happens, interest rates fall. And, last week, the Federal Reserve stated that they were done raising the short-term rate and will not make a move on rates at all in 2019.
 
As a result, interest rates have dropped to new lows not seen in over a year. For buyers looking at a $500,000 mortgage, the drop has resulted in a savings of $224 per month compared to last November. That is an annual savings of $2,688, or
$13,440 in 5 years. The savings are even more substantial for higher mortgage amounts.
 
 
 
 
This is where buyers need to understand that right NOW is an excellent time to cash in on today’s low interest rate. Waiting for interest rates to drop further is a lot like gambling. Reminiscing about the good ‘ol days when interest rates were in the mid-3% range will not magically make rates drop. Could they go down further? Perhaps. Could they go up again? Absolutely. The old saying, “a bird in the hand is worth two in the bush” applies. It is better to cash in today than to risk losing out on this opportunity by hoping rates fall further. There are plenty of stories of buyers who have kicked themselves for waiting too long.
 
In taking a closer look at affordability, for buyers looking for a $3,000 mortgage payment, along with a 20% down payment, the drop in interest rates has allowed them to afford a much larger home. Back in November 2018, they were looking at a $698,750 home with a 5% mortgage. That has improved spectacularly since. With today’s 4.25% interest rate, a buyer is now looking at purchasing a $762,500 home. That is an amazing increase of $63,750 in purchasing power.



The combination of improved home affordability and substantially more inventory than the last several spring selling seasons should lead to an increase in home buyer demand. Buyers, what are you waiting for? It is time to get off of the home buying fence and cash in your chips. 

Active Inventory: In the past couple of weeks, the active inventory increased by 3%.
In the past two weeks, the active listing inventory increased by 166 homes, up 3%, and now totals 6,532, the highest level since November last year. The inventory had been slowly rising, most likely due to the torrential rain that Southern California had experienced. Since much of the heavy rain is over, and now that is officially spring, more homeowners are opting to place their homes on the market. The increases will gain momentum in the coming weeks, the busiest time of the year for housing.  
 
Last year at this time there were 4,609 homes on the market. That means that there are 42% more homes available today. This is the highest level of homes on the market for this time of the year since 2012.
 
 
 
Demand: In the past couple of weeks, demand increased by 3%.
Demand, the number of new pending sales over the prior month, continued to rise, increasing by 78 pending sales in the past two weeks, up 3%, and now totals 2,350. The rapid increase in demand from the start of the year is starting to slow and will most likely only increase slightly until peaking sometime in May. From there, demand will slowly diminish through the rest of the Spring and Summer Markets.
 
The retreat in interest rates this year has helped demand considerably. Soft demand had been an enormous issue in the second half of 2018, but with falling rates demand has picked up.
 
Even with the strong increase in demand, it is important to note that the current demand reading continues to be the lowest for this time of the year since 2014. There still is buyer apprehension in approaching the housing market. They are careful not to overpay and are looking to offer only the Fair Market Value for a home. They are not willing to stretch the asking price, which is why homes are currently not appreciating much at all.
 
Last year at this time, there were 188 additional pending sales, 7% more than today.
 
The current Expected Market Time dropped from 84 days to 83 days in the past two weeks, a slight Seller’s Market. It is still the highest reading for this time of the year since 2011. Last year, the Expected Market Time was at 54 days, a HOT Seller’s Market.

Luxury EndThe luxury inventory climbed quite a bit.
In the past two-weeks, demand for homes above $1.25 million increased by 6 pending sales, a 2% increase, and now totals 352, its highest level since the end of June 2018. The luxury home inventory increased by 76 homes and now totals 2,090, a 4% increase. The overall expected market time for homes priced above $1.25 million increased from 175 days to 178 over the past two-weeks, a slight increase.
 
Year over year, luxury demand is down by 1 pending sale, basically the same as last year, and the active luxury listing inventory is up by an additional 293 homes, or 16%. There is a lot more seller competition so far this year. The expected market time last year was at 153 days, better than today.
 
For homes priced between $1.25 million and $1.5 million, in the past two-weeks, the expected market time increased from 95 to 103 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 140 to 146 days. For homes priced between $2 million and $4 million, the expected market time decreased from 245 to 230 days. For homes priced above $4 million, the expected market time decreased from 650 to 562 days. At 562 days, a seller would be looking at placing their home into escrow around the start of October 2020.
 
 
 
 
Orange County Housing Market Summary:

  • The active listing inventory increased by 166 homes in the past two weeks, up 3%, and now totals 6,532. Last year, there were 4,609 homes on the market, 1,923 fewer than today. There are 42% more homes than last year.
  • So far this year, 4% fewer homes came on the market below $500,000 compared to 2018, and there were 15% fewer closed sales. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is continuing to vanish.
  • Demand, the number of pending sales over the prior month, increased by 78 pending sales in the past two-weeks, up 3%, and now totals 2,350, its lowest level for this time of the year since 2014. Last year, there were 2,538 pending sales, 8% more than today.
  • The Expected Market Time for all of Orange County decreased from 84 days two weeks ago to 83 days today, a slight Seller’s Market (between 60 to 90 days) and the highest level for this time of the year since 2011. It was at 54 days last year.
  • For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 64 days. This range represents 42% of the active inventory and 54% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 66 days, a slight Seller’s Market. This range represents 18% of the active inventory and 22% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 85 days, a slight Seller’s Market.
  • For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time increased from 95 to 103 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 140 to 146 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 245 to 230 days. For luxury homes priced above $4 million, the expected market time decreased from 650 to 562 days.
  • The luxury end, all homes above $1.25 million, accounts for 32% of the inventory and only 16% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.8% of all listings and 1.8% of demand. There are only 19 foreclosures and 30 short sales available to purchase today in all of Orange County, 49 total distressed homes on the active market, down two from two-weeks ago. Last year there were 39 total distressed homes on the market, slightly less than today.
  • There were 1,543 closed residential resales in February, 15% fewer than February 2018’s 1,820 closed sales. February marked a 6% increase from January 2019. The sales to list price ratio was 97.4% for all of Orange County. Foreclosures accounted for just 0.3% of all closed sales, and short sales accounted for 0.6%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.

  • You will need a comprehensive Orange County market analysis.
  • You will need an expert price valuation so your Mission Viejo home can sell quickly without under-pricing.
  • You will need a comprehensive marketing campaign in order to receive the highest possible price for your Lake Forest home.
  • You will need to network with other Realtors who have buyers who may be interested in purchasing your Laguna Niguel home.
  • You will need a local advertising campaign including the creation of print and Internet advertising.
  • You will need proper signage to promote your Coto De Caza home.
  • You will need the proper legal representation to assure the transaction takes place smoothly.
  • You will need someone to coordinate showings and other appointments.
  • You will need someone to conduct, and drive traffic to, your open Irvine house.
  • You will need an experienced negotiator who knows what is reasonable and what is not.
  • You will need an expert who understands contingencies, cash offers, and so much more.
These are just a few items to consider when thinking about selling your home yourself. At the end of the day, it just isn't worth it. Contact me today and I can help you sell your home for the most possible money and make sure you have an easy transaction.

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