September 7th, 2010, 12:02 am · 70 Comments · posted by Jon Lansner
The latest Orange County home inventory report from Steve Thomas Altera Real Estate as of September 2 says …
After starting off the year with decent demand, we quickly realized that it was artificially high due to the Federal first time home buyer tax credit where buyers had to have a pending deal by April 30th. After April 30th, demand plunged as many buyers had already scurried to find something prior to the cutoff date. Basically, demand was pulled forward. Buyers that would have purchased during the summer had to buy early to cash in. In looking back, the original first time home buyer tax credit that ended in November was needed to help jump start an extremely sluggish market. The latest tax credit may have done more damage than good. The pumped-up pending sales figures ultimately led to pumped up closed sales figures. Reports of a year-over-year rise in demand, sales and the median sales price enticed many sidelined homeowners to place their homes on the market at unrealistic prices. They mistakenly thought that the market was turning along with home appreciation. With the end of the tax credit, demand, the number of new pending deals over the prior month, dropped significantly from its end of April peak of 3,979 pending sales. Demand now totals 2,893 pending sales, a 27% drop from its height.
Thomas calculates a “market time” benchmark tracking how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this Thomas logic, as of last Thursday, it would take:
- 4.05 months for buyers to gobble up all homes for sale at the current pace vs. 3.88 months two weeks ago vs. 2.46 months a year ago vs. 4.77 months two years ago.
- Homes listed for under a million bucks have a market time of 3.49 months vs. 11.54 months for homes listed for more than $1 million.
- So, basically, it is 3.3 times harder to sell a million-dollar-plus residence!
- And just so you know, the million-dollar market represents 20% of all homes listed and 7% of all homes that entered into escrow in the past 30 days.