Of course the hype is well deserved. Homes below $750,000 account for 57% of current active listing inventory, an astounding 82% of demand, and an expected market time of just 24 days. That means that homes priced above the range account for 43% of the listing inventory and only 18% of demand. So, it is safe to say that the lower price ranges are on fire. These are the ranges where they are selling almost as fast as they are placed on the market, with multiple offers, selling prices above the list price, frustrated buyers, and sellers calling the shots. The inventory is scarce and demand is through the roof.
The problem with talking about the housing market as a whole, buyers and sellers incorrectly assume that the market is the same in every community and in every price range. For Orange County as a whole, the expected market time is 35 days; yet, in Dana Point it is 108 days, and Laguna Beach it is 4 months. Of course, those communities have an average list price in the millions. Yet, when homeowners in these cities pick up their Sunday paper and read about a robust housing market and homes flying off the market, they generate an unrealistic expectation of their housing market.
Homes priced between $750,000 and $1.5 million have an expected market time of 64 days. That is still a sellers’ market, just not as sizzling as the lower ranges. They too can generate multiple, strong offers, but are more dependent upon the price. Part of the problem is financing is a little tighter and there are a few more hoops to jump through in the upper ranges. Conventional loans limits are at $625,500 and FHA loan limits are at $729,750. Above those limits and the government is no longer participating, requiring jumbo financing from the private arena. Jumbo financing is getting a little bit better, but it still has a long way to go.
The $750,000 to $1.5 million range represents 23% of the active inventory and only 13% of demand. Last year this range was a lot cooler with an expected market time over five months. Today, even at just over two months, sellers run a higher risk of being a bit too overzealous and often overprice their homes.
The upper ranges, above $1.5 million, are drastically improved compared to just one year ago. With an expected market time of nearly 14 months last year, double digits, sellers often wondered if their home would ever sell. Flash forward to today and the expected market time has been more than halved, sitting at nearly 5.5 months. This remarkable improvement illustrates that the recovery’s depth includes all price ranges and every neighborhood regardless of price.
There is a profound difference, though, between luxury homes and the lower price ranges. At 167 days, sellers should hardly expect their newly listed home to procure an immediate offer or multiple offers. A 167 day market is much different than 35 days, Orange County as a whole. Yet, the media and housing experts, myself included, talk about the housing market in general terms. Luxury homeowners hear that the market is recovering and buyers are flocking to purchase everything in sight. Their expectations are out of whack. It is not their fault though because very little emphasis is placed on discussing the luxury housing market. It accounts for 22% of the active listing inventory and a paltry 5% of demand. The bottom line: the luxury market is much stronger and healthier than one year ago, but sellers still need to pack their patience, carefully arrive at the asking price, and know that all of the housing hype does not entirely apply to them.
Active Inventory – Another Record Established: The record low inventory hit a new record low.
I am nothing short of amazed at the unabated drop in the active listing inventory. The inventory has continuously dropped from its 11,388 June 2011 mark to 3,534 homes today, a 69% drop. It shed 6%, 219 homes, in just two weeks and surprisingly still shows no signs of slowing. Since eclipsing the prior record low from 2005 of 4,912 homes back in August of this year, the current housing market has established a new record low every two weeks. As a buyer it was difficult to navigate back in 2005, but it is even tougher in today’s market. That is why the continuous drop is surprising. Part of the problem is that we are in the midst of the holiday market. Homeowners are not jumping at the opportunity to list their home, even if the market is outstanding; it is the holidays. Many potential sellers just don’t want to bother with the hassle of preparing their home for the market when there are parties to prepare for, presents to buy, and memories to make. The holidays are a special time and selling a home is very distracting. So, understandably, fewer homes are popping onto the market right now.
For the rest of the year, expect fewer sellers to place their homes on the market as we ride out the holidays. A few weeks after we usher in a New Year, more sellers will hit the market. With demand so hot, the inventory may only rise slightly, but at least there will be fresh inventory.
Last year at this time there were 9,172 homes on the market, more than double today’s level. The active inventory stood at 8,114 homes at the beginning of this year, 4,580 more than today.
Demand: With fewer homes coming on the market, demand is dropping.
First, let’s get something clear, demand is through the roof, but the numbers are dropping not because it is the holidays, but there just are not enough homes to sell. We track demand as the number of new pending sales over the prior month, a gauge of buying activity. However, when the inventory falls to record low levels, it prevents new pending sales. Today’s demand readings can be misleading. Demand dropped by 166 homes in the past two weeks and now totals 3,013 pending sales. Last year at this time there were 90 fewer pending sales, a 3% difference. But, there were 9,172 active listings back then too. For the remainder of the year, with fewer homes coming on the market, expect demand to continue to fall through the holidays.
The Distressed Market: Just like the active listing inventory as a whole, the distressed inventory shows no signs of stopping its unabated drop.
The distressed inventory shed an additional 8%, or 40 homes, in the past two weeks and now totals 450. That is not a typo; there are only 450 distressed homes, both short sales and foreclosures, on the active market, 13% of the total inventory and 33% of demand. In the past two weeks, the foreclosure inventory decreased by 20 homes, totaling 122, and has an expected market time of 19 days. The short sale inventory decreased by 20 homes in the past two weeks and now totals 328. The expected market time is only 12 days and continues to be one of the hottest segments of the housing market.
Written by,
Steven Thomas
Homes priced between $750,000 and $1.5 million have an expected market time of 64 days. That is still a sellers’ market, just not as sizzling as the lower ranges. They too can generate multiple, strong offers, but are more dependent upon the price. Part of the problem is financing is a little tighter and there are a few more hoops to jump through in the upper ranges. Conventional loans limits are at $625,500 and FHA loan limits are at $729,750. Above those limits and the government is no longer participating, requiring jumbo financing from the private arena. Jumbo financing is getting a little bit better, but it still has a long way to go.
The $750,000 to $1.5 million range represents 23% of the active inventory and only 13% of demand. Last year this range was a lot cooler with an expected market time over five months. Today, even at just over two months, sellers run a higher risk of being a bit too overzealous and often overprice their homes.
The upper ranges, above $1.5 million, are drastically improved compared to just one year ago. With an expected market time of nearly 14 months last year, double digits, sellers often wondered if their home would ever sell. Flash forward to today and the expected market time has been more than halved, sitting at nearly 5.5 months. This remarkable improvement illustrates that the recovery’s depth includes all price ranges and every neighborhood regardless of price.
There is a profound difference, though, between luxury homes and the lower price ranges. At 167 days, sellers should hardly expect their newly listed home to procure an immediate offer or multiple offers. A 167 day market is much different than 35 days, Orange County as a whole. Yet, the media and housing experts, myself included, talk about the housing market in general terms. Luxury homeowners hear that the market is recovering and buyers are flocking to purchase everything in sight. Their expectations are out of whack. It is not their fault though because very little emphasis is placed on discussing the luxury housing market. It accounts for 22% of the active listing inventory and a paltry 5% of demand. The bottom line: the luxury market is much stronger and healthier than one year ago, but sellers still need to pack their patience, carefully arrive at the asking price, and know that all of the housing hype does not entirely apply to them.
Active Inventory – Another Record Established: The record low inventory hit a new record low.
I am nothing short of amazed at the unabated drop in the active listing inventory. The inventory has continuously dropped from its 11,388 June 2011 mark to 3,534 homes today, a 69% drop. It shed 6%, 219 homes, in just two weeks and surprisingly still shows no signs of slowing. Since eclipsing the prior record low from 2005 of 4,912 homes back in August of this year, the current housing market has established a new record low every two weeks. As a buyer it was difficult to navigate back in 2005, but it is even tougher in today’s market. That is why the continuous drop is surprising. Part of the problem is that we are in the midst of the holiday market. Homeowners are not jumping at the opportunity to list their home, even if the market is outstanding; it is the holidays. Many potential sellers just don’t want to bother with the hassle of preparing their home for the market when there are parties to prepare for, presents to buy, and memories to make. The holidays are a special time and selling a home is very distracting. So, understandably, fewer homes are popping onto the market right now.
For the rest of the year, expect fewer sellers to place their homes on the market as we ride out the holidays. A few weeks after we usher in a New Year, more sellers will hit the market. With demand so hot, the inventory may only rise slightly, but at least there will be fresh inventory.
Last year at this time there were 9,172 homes on the market, more than double today’s level. The active inventory stood at 8,114 homes at the beginning of this year, 4,580 more than today.
Demand: With fewer homes coming on the market, demand is dropping.
First, let’s get something clear, demand is through the roof, but the numbers are dropping not because it is the holidays, but there just are not enough homes to sell. We track demand as the number of new pending sales over the prior month, a gauge of buying activity. However, when the inventory falls to record low levels, it prevents new pending sales. Today’s demand readings can be misleading. Demand dropped by 166 homes in the past two weeks and now totals 3,013 pending sales. Last year at this time there were 90 fewer pending sales, a 3% difference. But, there were 9,172 active listings back then too. For the remainder of the year, with fewer homes coming on the market, expect demand to continue to fall through the holidays.
The Distressed Market: Just like the active listing inventory as a whole, the distressed inventory shows no signs of stopping its unabated drop.
The distressed inventory shed an additional 8%, or 40 homes, in the past two weeks and now totals 450. That is not a typo; there are only 450 distressed homes, both short sales and foreclosures, on the active market, 13% of the total inventory and 33% of demand. In the past two weeks, the foreclosure inventory decreased by 20 homes, totaling 122, and has an expected market time of 19 days. The short sale inventory decreased by 20 homes in the past two weeks and now totals 328. The expected market time is only 12 days and continues to be one of the hottest segments of the housing market.
Written by,
Steven Thomas
