Orange County Housing Report: Over the Peak
Housing demand in Orange County has already peaked, meaning the market will slow from here.
An Early Peak: With a slight rise in interest rates since dropping to 4% at the end of March, demand peaked in April this year.
“The Happiest Place on Earth” is right in our back yard. Remember the unbelievable anticipation and unbridled excitement when you were a kid heading to Disneyland with the family? You could barely close your eyes the night before. Now imagine heading to this magic kingdom and arriving at noon. No big deal, on Mondays in May it is open until 11 PM. There is still plenty of time, right? You just missed the first few hours. Those may be THE best hours with the shortest lines, but 11 hours at Disneyland will be amazing and memorable, nonetheless. Selling a home after the peak in demand is similar. THE most optimal time to sell a home maybe in the rearview mirror, but there is still plenty of runway left in the housing market to accomplish the goal in making a move.
For sellers who are holding their collective breath anticipating the Spring Market to continue to accelerate from here, they will be disappointed. Demand, the last month of pending sales, peaked two weeks ago and dropped 3% since. It currently sits at 2,653 pending sales. From here, it will remain relatively the same until it methodically drops slowly but surely from June through the end of the year.
If demand is going to remain at roughly the same high level, what is the big deal? The active inventory will grow from here until peaking sometime in August. On average, in the past six years, the active inventory has grown by 1,350 homes, a 26% rise. With demand plateauing and then dropping, coupled with a rising inventory, the Expected Market Time (from coming on the market to opening escrow) will rise. The market will slow from here. The longer a homeowner waits to come on the market, the longer it will take to sell their home. The current Expected Market Time for all of Orange County is 81 days, rising from 76 days just two weeks ago. That is a slight Seller’s Market, where homes are not appreciating much at all, but sellers get to call more of the shots. It will continue to climb and surpass the 90-day mark sometime during the summer, reaching a Balanced Market, one that does not favor sellers or buyers (between 90 and 120 days).
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